Garanti BBVA (GARAN), a unit of BBVA (Madrid/BBVA), has obtained a 367-day sustainability-linked syndicated loan in tranches of $260mn and €143mn, the lender said on December 5.

Thirty five banks from 19 different countries participated in the facility.

The loan is to be used to finance international trade activities. The sustainability criteria include commitments to provide loans to green economy projects as well as to women-led and micro-scale companies that have been hit by natural disasters.

The costs were released in line with the benchmarks set by Akbank (AKBNK), a unit of Turkish conglomerate Sabanci Holding (SAHOL), at the guaranteed overnight financing rate (SOFR) plus 350bp and the euro interbank offered rate (Euribor) plus 325bp.

The rollover rate stood at 100%. In November 2022, Garanti obtained a $401mn loan at SOFR+425bp and Euribor+400bp. The renewal rate stood at 65%.

In line with local peers, Garanti, the fifth largest bank in Turkey with Turkish lira (TRY) 1.7 trillion ($60bn) worth of total assets at end-September, has a B-/Stable rating (one notch below Turkey’s sovereign rating and six notches below investment grade) from Fitch Ratings and a B3/Stable rating (six notches below investment grade in line with Turkey’s sovereign rating) from Moody’s Investors Service.

Garanti also has another outstanding syndicated loan. In June, it rolled the syndicated loan at a 73% rollover rate, while spreads remained at record high levels, namely SOFR+425bp and Euribor+400bp.

Chart: Garanti’s external debt composition at end-October.

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, Akbank has set the Turkey benchmark for the interest rates each season. In April 2022 and 2023, government-run 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.

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 autumn season this year, a total of nine Turkish banks rolled a combined sum of $4bn. The costs were 75bp lower compared to a year ago. The exchange rate-adjusted combined rollover rate came in at 129%.

Story chart: Turkish companies’ external debt rollover rates.

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

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

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.

As things stand, hopes for lower costs are now focused on 2024.

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%.

In the spring season of 2024, the same 11 banks will roll a combined sum of $6bn.

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
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%
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	$136		€404	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.