Akbank (AKBNK), a unit of Turkish conglomerate Sabanci Holding (SAHOL), has obtained a $750mn sustainability-linked syndicated loan in four tranches, the lender said on October 25.

Story chart: Turkish corporates’ external debt rollover rates.

Two 367-day tranches are worth $273mn and €254mn while two 734-day tranches are worth $160mn and €44mn.

A total of 46 banks from 21 countries, including 11 newcomers, participated in the facility.

The renewal rate stood at 124% while the spreads for the 367-day tranches fell sharply by 175bp compared to last year and by 75bp compared to the spring season. (See full list below).

The 734-day tranches have, meanwhile, emerged as a new phenomenon.

The benefits of Turkey’s so-called economic normalisation policy applied since June 2023 have clearly been observed in the external debt rollovers.

The cost of the 367-day USD-tranche stood at the guaranteed overnight financing rate (SOFR) plus 175bp while the cost of the 367-day EUR-tranche was the euro interbank offered rate (Euribor) plus 150bp.

The costs of the 734-day tranches, meanwhile, stood at SOFR+2.25% and Euribor+2.00%.

In October 2023, Akbank rolled its loan at a renewal rate of 146% and at costs of SOFR+3.50% and Euribor+3.25%.

Akbank has another syndicated loan. In April, it rolled this loan at a renewal rate of 120% and at costs of SOFR+2.50% and Euribor+2.25%.

In line with local peers, Akbank has a BB-/Stable rating from Fitch Ratings and a B1/Positive from Moody’s Investors Service.

$6bn will be rolled

In the autumn season of 2023, a total of nine Turkish banks rolled a combined sum of $4bn at a combined renewal rate of 129%.

The spreads declined by 75bp compared to the record high spreads of SOFR+4.25% and Euribor+4.00% seen in the spring 2023 and autumn 2022. 

In the spring season of 2024, 11 Turkish banks rolled a combined sum of $6bn. They obtained a total of $8bn worth of loans and the combined renewal rate came in at 129%.

In the autumn season of 2024, nine banks will roll a combined sum of $6bn.

Benchmarks declining

In addition to the significant recovery in spreads, the benchmarks are also falling.

The European Central Bank (ECB) on October 17 delivered another 25bp cut. So far, the ECB has delivered three rate cuts that have brought its deposit facility rate to 3.25%. It stood at 4.00% in September 2023, 3.75% on June 12 and 3.50% on September 18.

The Federal Reserve (Fed) is also expected to introduce another 25bp rate cut at its next open market committee meeting, set to be held on November 7.

So far in its easing, the Fed has delivered a cut amounting to 50bp. It brought the upper limit of its federal funds target range to 5.00% on September 18 from 5.50% in July 2023.

SOFR has, meanwhile, fallen below the 5% level although it still compares as high in terms of the 0.05% seen in October 2021.

Twelve-month Euribor has also fallen below the 3% level but still compares as significantly high with the minus 0.5% recorded in October 2021.

As things stand, benchmarks will fall further in the coming period.

Central bank chart: Top 10 Turkish banks’ combined syndicated loan renewal rates and costs.

Rollover rates rising

Turkish banks conduct 367-day (a ‘trick’ maturity for registering loans as long-term that uses two extra days) syndicated loan renewal seasons twice a year, with one season in spring (April-July) and the other in autumn (October-November).

They release identical costs, while some of the lenders, particularly smaller ones, pay higher fees.

In recent years, for each season Akbank has set the Turkey benchmark for the interest rates. In April 2022 and April 2023, government-run Ziraat Bank launched the spring seasons. However, Ziraat could not provide the costs and awaited Akbank’s released costs to provide its costs.

The share of syndicated loans in Turkey’s and Turkish banks’ external funding composition has declined in recent years. Turkey rolls over a combined sum of around $150-200bn each year.

Despite the lower share in the composition, the banks’ syndicated loan renewals are a good indicator for tracking developments in the sustainability of Turkey’s external debt burden.

 

		Total	Renewal	Maturity	Tranche	Cost	Tranche	Cost
		(mn)	Rate	(days)	1	1	2	2
Oct-24	Akbank (AKBNK)	$750	124%	367-734-day	$272.7-$159.5	SOFR+1.75-2.25%	€254.1-€43.5	Euribor+1.50-2.00%
Jul-24	TSKB (TSKB)	$190	155%	367-day	$49		€130
Jul-24	ING Turkey	€176	53%	367-day		SOFR+2.50%	€563
Jun-24	Denizbank	$940	178%	367-day	$647	SOFR+2.50%	€216	Chinese yuan 255mn
Jun-24	Isbank (ISCTR)	$1,055	163%	367-day	$442	SOFR+2.50%	€563	Euribor+2.25%
Jun-24	Garanti BBVA (GARAN)	$435	100%	367-day	$241	SOFR+2.50%	€179	Euribor+2.25%
May-24	Yapi Kredi (YKBNK)	$936	159%	367-day	$443	SOFR+2.50%	€455	Euribor+2.25%
May-24	QNB Finansbank (QNBFB)	$400	122%	367-day	$274	SOFR+2.50%	€116	Euribor+2.25%
May-24	Turk Eximbank	$728	109%	1-year	$120		€560
May-24	Vakifbank (VAKBN)	$915	113%	367-day	$361	SOFR+2.50%	€513	Euribor+2.25%
Apr-24	Ziraat Bank	$1,700	132%	367-day	$742	SOFR+2.50%	€884	Euribor+2.25%
Apr-24	Akbank (AKBNK)	$600	120%	367-day	$310	SOFR+2.50%	€267	Euribor+2.25%
Dec-23	Garanti BBVA (GARAN)	$415	100%	367-day	$260	SOFR+3.50%	€143	Euribor+3.25%
Nov-23	QNB Finansbank (QNBFB)	$500	108%	367-day	$242	SOFR+3.50%	€236	Euribor+3.25%
Nov-23	Vakifbank (VAKBN)	$653	113%	367-day	$323	SOFR+3.50%	€303	Euribor+3.25%
Nov-23	Isbank (ISCTR)	$915	166%	367-day	$465	SOFR+3.50%	€411	Euribor+3.25%
Nov-23	Denizbank	$845	134%	367-day	$425	SOFR+3.50%	€393	Euribor+3.25%
Nov-23	Turk Eximbank	$658	108%	1-year	$79		€496	Chinese yuan 350mn
Nov-23	Yapi Kredi Bank (YKBNK)	$755	159%	367-day	$359	SOFR+3.50%	€373	Euribor+3.25%
Oct-23	TEB	$330	120%	367-day	$79	SOFR+3.50%	€237	Euribor+3.25%
Oct-23	Akbank (AKBNK)	$600	146%	367-day	$318	SOFR+3.50%	€266	Euribor+3.25%

Table: Full list of Turkish banks’ syndicated loan renewals.