Turkey to redeem $1.5bn of 10-year eurobonds on November 7

Turkey to redeem $1.5bn of 10-year eurobonds on November 7
By Akin Nazli in Belgrade November 5, 2019

The Turkish Treasury will on November 7 redeem $1.5bn worth of 10-year eurobonds that were issued in September 2018 and paid a 7% coupon, according to the finance ministry.

At the beginning of October, there was speculation amid the investor community in London that a possible new Turkish eurobond issue was on the cards.

However, later in the month, Turkish President Recep Tayyip Erdogan went ahead with a military offensive against Kurdish fighters in northeast Syria. There is thus a big question mark over whether Erdogan will be able to obtain international market borrowings given the global condemnation, and even demonisation, he has been subjected to in response to the Syria incursion, which some analysts claim has included human rights atrocities.

The Turkish Treasury had about $2.7bn worth of deposits at the central bank as of October 25, according to bneIntellinews’ calculations.

Together with the $1.5bn scheduled for November 7, the Turkish Treasury will have redeemed a total of $3bn and €1.25bn this year, while raising a total of $8.7bn in eurobond sales. That included $7.25bn in USD papers, including $2bn from sukuks, and €1.25bn from five auctions held so far this year.

Turkish Treasury's Outstanding Eurobonds
Issue Date Maturity Year Currency Face (mn) Face ($mn) Coupon (%) Type ISIN
03/09/2008 11/03/2019 10.5 USD 1,500 1,500 7.000 Bond US900123BD15
01/02/2007 02/04/2019 12.2 EUR 1,250 1,618 5.875 Bond XS0285127329
30/04/2009 07/11/2019 10.5 USD 1,500 1,500 7.500 Bond US900123BF62
20/04/2010 18/05/2020 10.1 EUR 1,500 2,016 5.125 Bond XS0503454166
12/11/2010 18/05/2020 9.5 EUR 500 689 5.125 Reopen XS0503454166
02/06/2005 05/06/2020 15 USD 1,250 1,250 7.000 Bond US900123AX87
23/02/2007 05/06/2020 13.3 USD 750 750 7.000 Reopen US900123AX87
01/12/2017 07/12/2020 3 JPY 60,000 534 1.810 Bond JP579200AHQ2
11/03/2011 18/03/2021 10 JPY 180,000 2,171 1.870 Bond JP579200ABF8
11/03/2010 30/03/2021 11.1 USD 1,000 1,000 5.625 Bond US900123BH29
05/08/2010 30/03/2021 10.7 USD 1,000 1,000 5.625 Reopen US900123BH29
01/06/2016 08/06/2021 5 USD 1,000 1,000 4.251 Sukuk XS1303467077
05/11/2013 12/11/2021 8 EUR 1,250 1,688 4.350 Bond XS0993155398
13/02/2019 21/02/2022 3 USD 2,000 2,000 5.800 Sukuk XS1816199373
08/03/2012 15/03/2022 10 JPY 90,000 1,114 1.470 Bond JP579200ACF6
17/10/2011 25/03/2022 10.4 USD 1,000 1,000 5.125 Bond US900123BY51
18/01/2012 26/09/2022 10.7 USD 1,500 1,500 6.250 Bond US900123BZ27
16/02/2012 26/09/2022 10.6 USD 1,000 1,000 6.250 Reopen US900123BZ27
08/01/2013 23/03/2023 10.2 USD 1,500 1,500 3.250 Bond US900123CA66
30/03/2017 06/04/2023 6 USD 1,250 1,250 5.004 Sukuk XS1586385178
08/04/2014 11/04/2023 9 EUR 1,000 1,372 4.125 Bond XS1057340009
16/10/2018 23/12/2023 5.2 USD 2,000 2,000 7.250 Bond US900123CR91
22/01/2014 22/03/2024 10.2 USD 2,500 2,500 5.750 Bond US900123CF53
02/07/2019 10/08/2024 5.1 USD 2,250 2,250 6.350 Bond US900123CV04
17/09/2014 25/09/2024 10 JPY 100,000 934 1.050 Bond JP579200AEM8
18/11/2014 25/11/2024 10 USD 1,000 1,000 4.489 Sukuk XS1141043296
13/01/2005 05/02/2025 20.1 USD 2,000 2,000 7.375 Bond US900123AW05
01/11/2006 05/02/2025 18.3 USD 1,250 1,250 7.375 Reopen US900123AW05
24/01/2019 31/03/2025 6.2 EUR 1,250 1,420 4.625 Bond XS1843443356
07/06/2017 14/06/2025 8 EUR 1,000 1,125 3.250 Bond XS1629918415
07/11/2018 16/02/2026 7.3 EUR 1,500 1,712 5.200 Bond XS1909184753
08/04/2015 14/04/2026 11 USD 1,500 1,500 4.250 Bond US900123CJ75
02/03/2016 09/10/2026 10.6 USD 1,500 1,500 4.875 Bond US900123CK49
20/10/2016 09/10/2026 10 USD 1,500 1,500 4.875 Reopen US900123CK49
18/01/2017 25/03/2027 10.2 USD 2,000 2,000 6.000 Bond US900123CL22
23/02/2017 25/03/2027 10.1 USD 1,250 1,250 6.000 Reopen US900123CL22
09/01/2018 17/02/2028 10.1 USD 2,000 2,000 5.125 Bond US900123CP36
16/04/2018 24/10/2028 10.5 USD 2,000 2,000 6.125 Bond US900123CQ19
09/01/2019 26/04/2029 10.3 USD 2,000 2,000 7.625 Bond US900123CT57
26/03/2019 26/04/2029 10.1 USD 1,000 1,000 7.625 Reopen US900123CT57
10/01/2000 15/01/2030 30 USD 1,500 1,500 11.875 Bond US900123AL40
30/01/2013 07/02/2033 20 JPY 18,400 203 2.680 Bond JP579200ADE7
07/01/2004 14/02/2034 30.1 USD 1,500 1,500 8.000 Bond US900123AT75
04/01/2006 17/03/2036 30.2 USD 1,500 1,500 6.875 Bond US900123AY60
14/11/2006 17/03/2036 29.3 USD 750 750 6.875 Reopen US900123AY60
17/01/2007 17/03/2036 29.2 USD 500 500 6.875 Reopen US900123AY60
27/02/2008 05/03/2038 30 USD 1,000 1,000 7.250 Bond US900123BB58
05/01/2010 30/05/2040 30.4 USD 2,000 2,000 6.750 Bond US900123BG46
05/01/2011 14/01/2041 30 USD 1,000 1,000 6.000 Bond US900123BJ84
26/06/2012 14/01/2041 28.6 USD 1,000 1,000 6.000 Reopen US900123BJ84
11/12/2012 14/01/2041 28.1 USD 1,000 1,000 6.000 Reopen US900123BJ84
09/04/2013 16/04/2043 30 USD 1,500 1,500 4.875 Bond US900123CB40
13/01/2015 16/04/2043 28.3 USD 1,500 1,500 4.875 Reopen US900123CB40
12/02/2014 17/02/2045 31 USD 1,500 1,500 6.625 Bond US900123CG37
04/05/2016 17/02/2045 28.8 USD 1,500 1,500 6.625 Reopen US900123CG37
04/05/2017 11/05/2047 30 USD 1,750 1,750 5.750 Bond US900123CM05
13/09/2017 11/05/2047 29.7 USD 1,750 1,750 5.750 Reopen US900123CM05
source: treasury

The next scheduled eurobond redemption is set for May 18, 2020 to repay €2bn for 10-year EUR-denominated papers. In 2020, the Treasury will also, on June 5, redeem $2bn in 15-year USD papers as well as, on December 3, JPY60mn in samurai bonds.

From November 2019 to September 2020, the Treasury is scheduled to repay a total of $11.1bn in external debt principal and interest payments, according to latest data from the finance ministry.

Lately, local lender Garanti BBVA successfully redeemed on October 17 $750mn worth of 5-year USD-denominated eurobonds, which paid a 4.75% coupon.

The next scheduled eurobond redemption by a Turkish lender is scheduled for January 24, 2020 when private lender Akbank will repay $500mn (XS1111101314), according to Is Invest’s daily fixed income bulletin.

Also in 2020, state-run Halkbank will repay on February 5 $750mn (XS0882347072) while TSKB will redeem on April 22 $350mn and Isbank will repay on April 30 $750mn.

For the Turkish real sector, the next scheduled eurobond redemption is scheduled for April 24, 2020 when Koc Holding will repay $750mn (XS0922615819), which was already refinanced in March this year during a boom in eurobond issuances by Turkish issuers just prior to the storm over the Erdogan administration’s manipulation of financial markets that started in the week prior to the March 31 local election polls.

Major Eurobond Issues by Turkish Issuers
Issuer ISIN Coupon Volume (USD mn) End of placement Maturity date
Treasury US900123CV04 6.350% 2250 07/10/2019 08/10/2024
Vakifbank     150 06/25/2019 2024
Vakifbank XS1970705528 8.125% 600 03/21/2019 03/28/2024
Sisecam XS1961010987 6.95% 700 03/20/2019 03/14/2026
Treasury US900123CT57 7.625% 1000 03/26/2019 04/26/2029
Yapi Kredi Bank XS1958649854 8.25% 500 03/07/2019 10/15/2024
Koc Holding XS1961766596 6.50% 750 03/05/2019 03/11/2025
QNB Finansbank XS1959391019 6.875% 500 02/28/2019 09/07/2024
Yapi Kredi Bank XS1957348441 FRN 321.6 02/25/2019 11/25/2027
Turk Telekom XS1955059420 6.875% 500 02/21/2019 02/28/2025
Treasury (sukuk) XS1816199373 5.80% 2000 02/21/2019 02/21/2022
Treasury   4.63% EUR1.25bn 01/31/2019 03/31/2025
Eximbank XS1917720911 8.25% 500 01/24/2019 01/24/2024
Treasury   7.625% 2000 01/16/2019 04/26/2029
source: cbonds, intellinews

Also in 2020, Yasar Holding will redeem on May 6 $172mn (XS1132450427) while glassmaker Sisecam will repay on May 9 $300mn, already refinanced in March this year. Mersin Port will redeem on August 12 $450mn ((XS0957598070).

According to recent Reuters reports, Mersin Port and Turkey’s flag carrier Turkish Airlines are currently in the debt market.

The latest eurobond auction by the Treasury was held in July to sell $2.25bn worth of 5-year USD-denominated papers with a coupon rate of 6.35%. That was also the latest eurobond sale held by a Turkish issuer.

Fitch Ratings places Turkey at BB-/Stable, three notches below investment grade. Moody’s Rating Services rates Turkey at B1/Negative, four notches below investment grade, while Standard & Poor’s rates Turkey at B+/Stable, also four notches below investment grade.

Meanwhile, the Turkish government sticks to its FX and gold dominated domestic borrowing at a pace that continues to raise eyebrows.

The Treasury has borrowed a total of 82.3 tonnes of gold from the domestic market since October 2017, Finance Minister Berat Albayrak said on November 5 in a tweet.

Government-run news service Anadolu Agency reported details showing that 2.5 tonnes was borrowed in October 2017, 1.9 tonnes in April 2018, 2.1 tonnes in September-October 2018 and 1.1 tonnes in December 2018-February 2019. All of it came from individual investors.

From institutional investors, 26.18 tonnes was borrowed in February this year, 8.01 tonnes in June, 20.9 tonnes in September, 15.68 tonnes in October and 10.39 tonnes in November.

Central government debt stock rose by 16% year-to-date to TRY1.24 trillion at end-September. It consisted of TRY701bn in domestic debt and TRY538bn in external debt.

Meanwhile, the FX-denominated debt amounts to TRY607bn, suggesting TRY69bn worth of outstanding FX-denominated domestic debt stock.

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