LPC-Turkish borrowers target Asian loan investors
Turkish banks and companies are trying to sell syndicated loans to Asian investors after a drop in Asian lending but investors are wary of increasing Turkish exposure due to political instability following June’s elections, bankers said.
Turkish borrowers are targeting Asian investors in a bid to extend loan maturities after new bank regulation gave capital relief on loans with tenors of more than a year, but could find limited appetite, the sources said.
The failure of President Recep Tayyip Erdogan and his Islamist-rooted AKP party to secure a majority raises the prospect of a coalition government or further elections which are exacerbating fears about Turkey’s slowing economy.
“I don’t think we are able to touch these Turkish names, as we are really concerned about geopolitics,” a loan banker at a Taiwanese bank’s offshore banking unit said.
Less than 20 loans for Turkish borrowers have been syndicated in Asia since 1997, most of which were export or project-related financings backed by Japanese banks, according to Thomson Reuters LPC data.
Akbank, one of Turkey’s largest banks, is targeting new lenders in Asia and the Middle East for a $250 million, three-year bullet term loan, which is new money for the bank.
State-owned Turk Eximbank has introduced a new two-year tranche on a 350 million euro dual-currency term loan which it is currently syndicating to investors in Asian and Europe. The deal, which refinances existing debt, is Turk Eximbank’s second loan this year.
Turkish engineering company Hema Endustri AS is also syndicating a 200 million euro, five-year loan refinancing in Asia’s primary loan market.
“We are starting to see more Turkish borrowers tapping Asia’s market since the beginning of the year,” the loan banker at the Taiwanese bank said. Taiwanese banks are Asia’s most active retail lenders.
SOME RESERVATIONS
Asian lenders are wary of Turkey’s polarised politics, a stalling economy which is vulnerable to external shocks and its geographical position in a volatile region as extremists press on its borders with Syria and Iraq.
Asian investors are however looking for lending opportunities after a 37 percent drop in Asian loan volume to $159 billion in the year to date compared with a year earlier, according to Thomson Reuters LPC data.
Turkish loans carry higher pricing than similarly-rated Asian credits, however, which may tempt some lenders.
Akbank’s loan pays top-level all-in pricing of 185 basis points (bp), which is more attractive than all-in pricing of 146.3bp on the three-year tranche of a recently-closed $1 billion loan for Indonesia Eximbank.
Turk Eximbank is offering all-in pricing of up to 150bp for one and two year tranches. All three borrowers have Baa3 ratings from Moody’s.
“There is a lack of deals in the market being shown to Asian banks which meet their return requirements. They will find some appetite for these deals in Asia,” a London-based banker said.
Existing loans for Turkish banks including Garanti Bank, Isbank, Ziraat Bank and Finansbank which mature from November 2015 to May 2016, are also being marketed in Asia’s secondary market at the moment.
