TURKEY: Political solution helps trade loans

29 March 1996

The formation of a new government has encouraged a flurry of one-year, external borrowing by domestic banks, led by Garanti Bankasi, which signed a $110 million loan on 15 March.

The Garanti loan has set a benchmark with an all-in cost of 80 basis points over the London interbank offered rate (Libor), and a base margin of 60 basis points over Libor, banking sources say.

Other banks seeking deals of between $30 million-50 million include Turk Ekonomi Bankasi (TEB), Korfez Bank, state Emlak Bankasi, Demirbank and Itkisat Bankasi, the banking sources say.

Korfez Bank expected to sign a $50 million loan by 29 March arranged by Citibank with a base margin of 100 basis points above Libor, plus fees of around 30 basis points.

Emlak Bankasi has awarded a mandate for a $30 million, one-year syndicated loan. The fully-underwritten, pre-export financing facility will have an all-in cost of 87.25 basis points over Libor, with a base margin of 50 basis points over Libor. The deal is expected to be signed by 15 April.

TEB has mandated a Japanese and a US institution for a deal in the region of $50 million, but pricing has yet to be dislosed.

Demirbank and Iktisat Bankasi have not yet awarded mandates. Demirbank expects to reach a decision in early April on a loan of around $40 million over one year, or for two years with a put option after one year. It will be seeking an interest rate of 80-90 basis points over Libor.

The deals are mostly being structured as export-financings to be eligible for exemptions from a 4 per cent special levy on new, short-term foreign borrowings. The surcharge was first introduced at a level of 6 per cent in September and subsequently lowered to 4 per cent at the beginning of 1996.

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