The local Garanti Bankasi is seeking to exercise the option of a one- year extension to a DM150 million ($100 million), one-year loan contracted in 1993 (MEED 3:12:93). Bankers say it has received a positive reception from most of the original participants after offering to raise fees.
The original syndication paid 65 basis points over the London interbank offered rate (Libor), with an extension fee of 20 basis points, and a participation fee depending on the amounts underwritten of between 12.5 basis points and 37.5 basis points, according to banking sources. The all-in spread now on the table is around 122.5 basis points over Libor, through increases in the extension and participation fees.
This would be very fine pricing, since the international markets are still wary of Turkish risk because of the crisis and successive downgrades in 1994 from US and Japanese risk rating agencies. An attempt in September to tap the markets by Daiwa Europe on behalf of Turk Eximbank for a $100 million, two-year deal with a one year put at around 180 basis points all-in failed. However, Garanti says it hopes to conclude negotiations by mid-November before the maturity date of 30 November.
There are 31 banks in the original syndication. Co-arrangers are WestLB Group, Bank of America International, Dai-Ichi Kangyo Bank, and Bayerische Vereinsbank. The agent is Bank of America. Apart from the above institutions, the lead managers include Bank of New York, DG Bank, and Gulf International Bank.
Some banks have said they consider the pricing too low – a one-year Turkish deal could easily be sold for 150 basis points above Libor. However, other banks may increase their participation to compensate, says Garanti. Otherwise, it will probably have to meet the maturities of withdrawing participants, say the banking sources.
Garanti is also due to make a bullet payment in December on a $60 million, two-year deal at Libor plus 100 basis points arranged by Banque Nationale de Paris, Sabanci Bank, and Dresdner Bank.