Turkey's Garanti BBVA (GARAN), a unit of BBVA (Madrid/BBVA), has obtained a $415mn sustainability-linked syndicated loan in two tranches of $244mn and €162mn, the lender said on December 3.

A total of 43 financial institutions from 21 different countries participated in the loan.

The costs were released in line with the benchmarks set by Akbank (AKBNK), a unit of Turkish conglomerate Sabanci Holding (SAHOL).

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 renewal rate stood at 101%. In December 2023, Garanti rolled its loan at a 100% rollover rate.

The lender has another syndicated loan. In June, it rolled that loan at 100% renewal rate.

Garanti has a BB-/Stable rating from Fitch Ratings and a Ba3/Positive from Moody’s Investors Service.

Longer maturities

Garanti has, as usual, concluded the autumn season for Turkish banks’ syndicated loan renewals.

Until this latest cycle, Turkish banks were known for obtaining 367-day (a ‘trick’ maturity for registering loans as long-term that uses two extra days) syndicated loans twice a year, with one season in spring (April-July) and the other in the autumn (October-November).

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

In this autumn season, 371-day, 734-day and 1,101-day tranches emerged as a new phenomenon.

Costs down 175bp y/y

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

During this autumn season, 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 costs of the 734-day tranches stood at SOFR+2.25% and Euribor+2.00%.

The costs of the 1,101-day tranches were, meanwhile, released at SOFR+2.35% and Euribor+2.10%.

Benchmarks declining

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

On November 7, the Federal Reserve (Fed) delivered another 25bp rate cut. Since September, it has delivered two rate cuts, bringing the upper limit of its federal funds target range to 4.75% from 5.50%.

The Fed’s next rate-setting meeting will be held on January 29.

The European Central Bank (ECB) has, meanwhile, delivered three rate cuts. They brought its deposit facility rate to 3.25% in October from 4.00% in June.

On December 12, the regulator will hold its next rates meeting. It is expected to deliver another rate cut.

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

Twelve-month Euribor remains below the 3% level but still compares as significantly high in comparison to the minus 0.5% recorded in October 2021.

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

127% combined rollover rate

In the autumn season of 2024, a total of nine Turkish banks will roll a combined sum of $6bn at a combined rollover rate of 127% in obtaining a combined sum of $7.4bn via 10 facilities.

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 prior to providing 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.

In the spring season of 2025, 11 banks will roll a combined sum of $8bn.

		Total	Renewal	Maturity	Tranche	Cost	Tranche	Cost
		(mn)	Rate	(days)	1	1	2	2
Dec-24	Garanti BBVA (GARAN)	$415	101%	367-day	$244	SOFR+1.75%	€162	Euribor+1.50%
Nov-24	QNB Turkey (QNBFB)	$651	133%	367-734-1,101-day	$135-187.8-68	SOFR+1.75-2.25-2.35%	€106-107.5-34	Euribor+1.50-2.00-2.10%
Nov-24	Denizbank	$1,000	119%	367-734-day	$228-289.5	SOFR+1.75-2.25%	€314.34666667-145	Euribor+1.50-2.00%
Nov-24	Vakifbank (VAKBN)	$870	133%	367-day	$519	SOFR+1.75%	€331	Euribor+1.50%
Nov-24	Isbank (ISCTR)	$1,104	124%	371-day	$585	SOFR+1.75%	€495	Euribor+1.50%
Nov-24	Turk Eximbank	$796	121%	1-2-year	$297		€368	Chinese yuan 700mn
Nov-24	Yapi Kredi Bank (YKBNK)	$1,052	138%	367-day	$605	SOFR+1.75%	€410	Euribor+1.50%
Nov-24	TEB	$450	134%	367-734-day	$46-$66	SOFR+1.75-2.25%	€248-€62.5	Euribor+1.50-2.00%
Nov-24	Denizbank	$340	120%	367-734-day	$10-$270	SOFR+1.75-2.25%	€5-€50	Euribor+1.50-2.00%
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%
Sep-23	Denizbank	$283	-	367-day				murabaha

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