Published: May 13, 2020
Turkish companies find loans as central bank takes record steps
Turkey’s Akbank and biscuit maker Ulker made successful trips to the loan market for deals totalling more than US$1bn at the start of April as the coronavirus tore through Europe, but economic pain is hitting the country hard and the central bank has taken an unprecedented step to start buying debt.
Akbank’s US$560mn-equvalent one-year facility and Ulker’s US$455mn deal both came on April 2, directly in the midst of the Covid-19 outbreak in Europe.
The Akbank deal is split between euro and dollar tranches. The euro tranche pays 200bp over Euribor, while the dollar portion pays 225bp over Libor. This is 40bp cheaper on the euro deal and 25bp cheaper on the dollar deal than the facility being replaced, despite the heavy volatility in the markets.
“The global Covid-19 pandemic has a negative impact on real economies and daily life as well as on financial markets,” said Akbank chief executive officer Hakan Binbasgil, in a statement. “Along with the difficult access to liquidity and FX resources, the transition of many companies and banks to remote working affects the ratification process of syndicated loans.”
Akbank put the improved terms down to international banks’ confidence in the bank and the Turkish banking sector. However, there are serious questions over Turkey’s banks as Covid-19 continues to shutter economies around the world.