Akbank (AKBNK), a unit of Turkish conglomerate Sabanci Holding (SAHOL), has obtained a 367-day sustainability-linked syndicated loan in two tranches of $266mn and €318mn, the lender said on October 27.

Story chart: Turkish corporates’ external debt rollover rates.

A total of 36 banks from 18 different countries, including 13 newcomers, participated in the facility.

The renewal rate jumped to 146%, while spreads fell sharply by 75bp. This could be seen as the first clear sign of the benefits of Turkey’s so-called economic normalisation policy applied since June.

The cost of the USD-tranche stood at the guaranteed overnight financing rate (SOFR) plus 350bp while the cost of the EUR-tranche was the euro interbank offered rate (Euribor) plus 325bp.

In October 2022, Akbank launched the autumn syndicated loan renewals season for local peers at a rollover rate of 60% and at record high spreads of SOFR+4.25% and Euribor+4.00%.

Despite the significant recovery in spreads, the costs still stand close to the double digits as the benchmarks remain painfully high.

SOFR persists above the 5%-level, compared with the 0.05% seen in October 2021, while 12-month Euribor remains above the 4%-level, compared with the minus 0.5% recorded in October 2021.

All the benchmarks have been on the rise in parallel with the global monetary tightening trend, which was expected to go into reverse this year. However, it seems rate cuts have been delayed to 2024.

In November 2024, the US is to hold its presidential election. Monetary policy moves have around a six-month lag in showing an impact on the real economy. The Biden administration may enter the election period with a tight monetary stance.

In line with local peers, Akbank, the sixth largest bank in Turkey with Turkish lira (TRY) 1.4 trillion ($53bn) worth of assets at end-June, has a B-/Stable (one notch below Turkey’s sovereign rating and six notches below investment grade) from Fitch Ratings and a B3/Stable (six notches below investment grade in line with Turkey’s sovereign rating) from Moody’s Investors Service.

Chart: Akbank’s wholesale funding profile as of October.

In the autumn season this year, a total of nine Turkish banks will roll a combined sum of $4bn. (See the full list below).

In the autumn refinancing season of 2022, nine Turkish banks rolled a combined sum of $6bn at a rollover rate of 77%. The costs were in line with the benchmarks set by Akbank, namely SOFR+4.25% and Euribor+4.00%.

In the spring season of 2023, 11 banks renewed a combined sum of $7bn at a combined rollover rate of 88%. All costs were reported as in line with the benchmarks set by Akbank, namely SOFR+4.25% and Euribor+4.00%.

Chart: Rollover Ratio of Syndicated Loans and Cost of Syndicated loans calculated by the central bank for the top 10 big-cap banks.

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 in syndicated loan renewals, while some of the lenders, particularly smaller ones, pay higher fees.

Across recent years, Akbank has set the Turkey benchmark for the interest rates each season. In April 2022 and 2023, Ziraat Bank launched the spring seasons. However, Ziraat could not provide the costs this year. It 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.

Nevertheless, the banks’ syndicated loan renewals are a good indicator in following 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-23	Akbank (AKBNK)	$600	146%	367-day	$318	SOFR+3.50%	€266	Euribor+3.25%
Jul-23	TSKB (TSKB)	$123	113%	367-day	$18		€94
Jun-23	ING Turkey	€332	112%	367-day		SOFR+4.25%		Euribor+4.00%
Jun-23	Denizbank	$530	117%	364-367-day	$297		€183	Chinese yuan 255mn
Jun-23	Isbank (ISCTR)	$639	83%	367-day	$224	SOFR+4.25%	€388	Euribor+4.00%
Jun-23	Garanti BBVA (GARAN)	$433	73%	367-day	$199	SOFR+4.25%	€219	Euribor+4.00%
Jun-23	Yapi Kredi (YKBNK)	$580	78%	367-day	$202	SOFR+4.25%	€353	Euribor+4.00%
May-23	QNB Finansbank (QNBFB)	$329	102%	367-day	$171	SOFR+4.25%	€144	Euribor+4.00%
May-23	Vakifbank (VAKBN)	$817	81%	367-day	$190	SOFR+4.25%	€576	Euribor+4.00%
May-23	Turk Eximbank	$670	89%	364-day	$54		€522	Chinese yuan 325mn
Apr-23	Akbank (AKBNK)	$500	71%	367-day	$246	SOFR+4.25%	€233	Euribor+4.00%
Apr-23	Ziraat Bank	$1,300	103%	367-day	$432		€779
Nov-22	Garanti BBVA (GARAN)	$401	65%	367-day	$155	SOFR+4.25%	€239	Euribor+4.00%
Nov-22	QNB Finansbank (QNBFB)	$545	104%	367-day	$185	SOFR+4.25%	€253	Euribor+4.00%
Nov-22	Vakifbank (VAKBN)	$560	91%	367-day	$223	SOFR+4.25%	€328	Euribor+4.00%
Nov-22	Isbank (ISCTR)	$535	69%	367-day	$191	SOFR+4.25%	€331	Euribor+4.00%
Nov-22	Turk Eximbank	$588	101%	1-year	€404		€136	Chinese yuan 350mn
Nov-22	Denizbank	$606	78%	367-day	$277	SOFR+4.25%	€330	Euribor+4.00%
Nov-22	Yapi Kredi Bank (YKBNK)	$458	61%	367-day	$210	SOFR+4.25%	€249	Euribor+4.00%
Oct-22	TEB	$262	77%	367-day	$64	SOFR+4.25%	€200	Euribor+4.00%
Oct-22	Akbank (AKBNK)	$403	60%	367-day	$225	SOFR+4.25%	€178	Euribor+4.00%

 

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