Turk Ekonomi Bankasi (TEB), a unit of BNP Paribas (Paris/BNP), has sold $400mn of 10-year subordinated (Tier II) eurobonds at a coupon rate of 9.375%, the bank said on January 10.

The papers are callable at the end of the fifth year.

In December, TEB recalled a €125mn subordinated paper due 2028, which was sold to BNP Paribas in 2018.

Chart: TEB’s wholesale funding composition as of end-September.

In line with local peers, TEB, the 11th largest bank in Turkey with Turkish lira (TRY) 355bn ($12bn) worth of assets at end-September, 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.

Also on January 10, Yapi Kredi Bank (YKBNK), a unit of Turkish conglomerate Koc Holding (KCHOL), sold $650mn of 10-year subordinated (Tier II) eurobonds at a coupon rate of 9.25%.
 

Table: Turkish banking industry's outstanding subordinated (Tier II) eurobonds.

The market norm for Turkish banks has generally been to call Tier 2 debt after five years. In 2022 and 2023, some Turkish banks, however, opted not to recall their subordinated papers.

Isbank (ISCTR) has the next callable paper (XS2106022754) among Turkish banks. In May, it decided not to recall its $500mn of 11-year subordinated (Tier II) eurobonds (XS1623796072/US90016BAF58), sold in 2017 and callable on June 29, 2023.

The global markets are still in a new year mood of positivity. Through February, the positivity may sustain.

Turkey’s five-year credit default swaps (CDS) remain above the 300-level, while the yield on the Turkish government’s 10-year eurobonds remains below the 8%-level.

On January 24, Turkish government-run Turk Eximbank is to redeem $500mn of papers (XS1917720911).
 

Table: Upcoming redemptions by Turkish issuers.

In 2023, Turkish issuers sold $17bn worth of eurobonds across 19 auctions while they redeemed a total of $11bn across 15 papers.

In 2024, Turkish eurobond sellers are supposed to redeem $16bn worth of 19 papers. So far this year, three local banks sold a total of $1.55bn worth of three papers.
 

Table: Major eurobond sales by Turkish issuers.

As of November 30, Turkey’s Treasury had a total of 42 outstanding eurobonds, including five sukuk papers. Four papers are EUR-denominated and two papers are Samurai bonds, while the others are USD-denominated.

The combined sum of the Treasury’s papers amounted to $94bn in nominal terms and $90bn at market value as of January 5. Foreigners held 37% of the papers, down from 59% in 2019.

Turkish banks had a total of $27bn worth of outstanding eurobonds in nominal terms. Foreigners held a 49% share.

Corporates had $11bn worth of outstanding papers. The foreign investors’ share stood at 87%.

The combined sum of the ESG-linked papers sold abroad by Turkish entities stood at $11bn, including $6bn by banks, $3bn by the Treasury and $2bn by corporates.
 

Table: Awaited eurobond sales by Turkish issuers.