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May 2010 | ifr special report | 13 FI LOANS Banks on parade


Turkey’s banks have made their annual excursion to the syndicated loan market. The shape of this market in the future will be determined in large part by the extent to which they consider long term bond financing as an alternative. The speed of this transition depends entirely on the regulator, which, for now, is keeping the bond market at arm’s length. Nick Lordreports.


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The primacy of relationships in determining Turkish bank deals can be seen in the pricing. The fact that all Turkish banks pay the same price for debt shows how international correspondent banks are keen to get any Turkish bank assets on to their books regardless of the credit of the underlying institution.


n May 5, Garanti Bank became the penultimate major Turkish bank to tap into the interna- tional bank loan market when it sold a one year dual currency


loan deal to 41 banks. The deal saw demand of €850m, after an initial target of €600m. The books were eventually closed with the deal sized at €617m and US$116.9m. As a result of the increase in demand, the deal was able to replace two existing facilities of US$109m and €517m that were signed a year ago.


Senior mandated lead arrangers on the transactions were Commerzbank and Standard Chartered, with Commerzbank also taking the roles of documentation and facility agent. Of the 41 banks in the deal, 22 joined at mandate lead arrangers, even though it was styled as a club deal and not a syndication. This was largely due to the fact that these banks wanted to get exposure to Turkish banks and so went into the trade for relationship reasons. The primacy of relationships in determining Turkish bank deals can also be seen in the pricing. Garanti -like all the banks that have come before it this year - priced its deal at 150bps, made up of a 75% coupon and 75% of fees. The fact that all Turkish banks pay the same price for this debt shows how international correspon- dent banks are keen to get any Turkish bank assets on to their books regardless of the credit of the underlying institution.


One price fits all


Garanti for instance, is currently undergoing a major shift of ownership, as GE tries to sell its 20% stake to a range of bidders. The possible new owners could include the family that owns parent company Dogus Holdings, a European banking group, or even an international private equity firm. This is clearly a material event from a credit point of view. And yet Garanti Bank, the second largest and most profitable bank in Turkey, still


priced its deal at the same spread as smaller state owned bank Vakif Bank, which came out with its one year syndication in March. Vakif sold a dual tranche one year club deal comprising a US$170m and €566.5m, replacing the previous year’s deals which were US$80m and €178m, as well as taking out a three year US$197m facility that was signed in 2006. WestLB was the co- ordinator of the deal and 33 banks partici- pated.


The largest deal to have come out so far this year was Akbank’s March trade, comprising US$437.5m and €584.5m. This US$1.2bn equivalent was sold to refinance a US$600m facility taken out last year. One smaller transaction that differed from the normal structure of these deals was Bank Asya’s one year murabaha deal. Asya is Turkey’s leading Islamic bank and it mandated ABC Islamic, Noor Islamic and Standard Chartered to lead the deal which came in at US$250m, a considerable increase of the US$75m targeted. All the major banks, apart from Isbank


have now tapped the international syndica- tions market. Isbank is expected in coming weeks and has mandated WestLB to undertake the transaction. Some bankers in Istanbul suggested it is waiting to be last to see if it can break through that all important 150bps level, but international lenders say this is unlikely.


“The price is the same for all the banks,“ said Barbara Berchtold, head of DCM at Commerzbank in Frankfurt, who lead the Garanti transaction. “Even though all the banks are different entities, they are rated similarly and the transactions are largely relationship-driven. As a result, in the last four years we have seen all the banks pay the same price for these deals.” It is arguably the desire of the lenders to maintain relationships with the Turkish banks that is keeping the price where it is. Without this desire, “Turkish banks would have to pay more but lenders will take a


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