The treasury has awarded Citibank a mandate to arrange a $100 million, one-year loan for the state Soil Products Office (TMO), say Istanbul bankers. The mandate for the loan to fund TMO’s forthcoming domestic grain purchases and exports was awarded after protracted negotiations over the loan’s pricing.
The interest spread in the all-in cost of 120 basis points over the London interbank offered rate (Libor) will be around 75 basis points. Istanbul banking sources say hard negotiating by the treasury pushed the price down from a starting offer by Citibank of around 200 basis points all- in around three to four weeks ago.
The treasury has tightened up on interest rates in its mandates for external loans sought by Turkish state institutions since it re-entered the international markets with a $500 million, three-year balance of payments loan in April after more than a year of absence during domestic economic crisis.
Keen international demand for loans at ever lower rates sought by private sector Turkish borrowers has encouraged the treasury, analysts say. General syndication started recently for a $100 million, one-year deal for the leading private sector bank Garanti Bankasi at an interest spread of 80 basis points above Libor and an all-in cost of 110 basis points, bankers say.
Japanese banks switching back on for Turkey have been pushing prices down, says one banker. However, Citibank signed a $50 million, one-year loan on 15 June to state Turkiye Vakiflar Bankasi on behalf of syndicate of 18 banks at a spread of 145 basis points over Libor and about 160 basis points all-in, the sources noted. The US institution is also arranging a $25 million, two year deal for the private sector Dogus Group.