A total of 26 banks from 13 different countries participated in the facility.
The loan is to be used to finance international trade activities while the sustainability criteria include commitments to provide loans to women-led and micro-scale companies in Turkey’s earthquake-hit region.
The renewal rate stood at 73%, while spreads remained at record high levels.
Story chart: Turkish companies’ external debt rollover rates.
The bank has another syndicated facility. In November 2022, it obtained a 367-day syndicated loan in tranches of $155mn and €239mn. The rollover rate stood at 61%. The costs stood at SOFR+4.25% and Euribor+4.00%.
Chart: Garanti’s funding composition at end-March.
In line with local peers, Garanti, the fifth largest bank in Turkey with Turkish lira (TRY) 1.3 trillion ($63bn) worth of total assets at end-March, has a B-/Negative (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.
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).
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.
In the autumn refinancing season of 2022, nine Turkish banks renewed an exchange rate-adjusted combined sum of $5.6bn, obtaining $4.3bn worth of fresh loans. The rollover rate stood at 77%.
The private banks’ renewal rates were very low, in the 60-70%s, while the spreads were at record high levels. QNB Finansbank registered the highest rollover rate of 104%. Government-run banks registered 90-100% rates.
In the spring season of 2022, 11 banks renewed $8bn of loans at a combined renewal rate of 92% with borrowing amounting to $7bn in total. The costs of the USD-tranches stood at the guaranteed overnight financing rate (SOFR) plus 275bp. The costs of the EUR-tranche were Euribor+210bp. In spring 2021, the costs stood at Libor + 2.50% and Euribor + 2.25%.
In the spring season of this year, 11 banks are to renew a combined sum of $7bn. And, in the autumn season, nine banks are to roll over a combined sum of $4bn.
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.
Benchmarks remain painfully high as SOFR remains above the 5%-level, compared to the 0.05% seen in October 2021, while 12-month Euribor is testing the 4%-level, compared to the minus 0.5% recorded in October 2021.
Recently, all the benchmarks have been on the rise in parallel with the global monetary tightening trend, which is expected to be reversed this year.
|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||Turk Eximbank||$670||89%||364-day||$54||€522||Chinese yuan 325mn|
|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||Turk Eximbank||$588||101%||1-year||€404||€136||Chinese yuan 350mn|
|Nov-22||Yapi Kredi Bank (YKBNK)||$458||61%||367-day||$210||SOFR+4.25%||€249||Euribor+4.00%|
|Jun-22||Denizbank||$453||120%||367-day||$196||€204||364-day||Chinese yuan 255mn|
|May-22||Garanti BBVA (GARAN)||$594||100%||367-day||$284||SOFR+2.75%||€291||Euribor+2.10%|
|May-22||Yapi Kredi (YKBNK)||$811||91%||367-day||$350||SOFR+2.75%||€432||Euribor+2.10%|
|May-22||QNB Finansbank (QNBFB)||$364||118%||367-day||$137||SOFR+2.75%||€212||Euribor+2.10%|
Table: Full list of Turkish banks’ syndicated loan renewals.