The treasury issued a term sheet for its $500 million loan to international commercial banks on 24 February, say bankers. The three-year loan reportedly offers an overall interest rate of around 3.5 per cent over the London interbank offered rate (Libor).
It will be the first attempt in a year by the treasury to tap the international markets for a general purpose, sovereign borrowing. The loan should re- establish Turkey’s presence and creditworthiness in the markets, analysts say.
The term sheet was to be sent to around 30 international institutions. Each institution will be on an equal footing in the deal, as the treasury itself is acting as arranger. Banks on close terms, including Citibank, Chase Manhattan, and JP Morgan, may assume roles such as bookkeeping and documentation.
Each participants are likely to subscribe to $30 million. The outcome of Prime Minister Tansu Ciller’s visit to Japan, starting on 26 February, and the progress of talks with the IMF will have an important bearing on the loan, analysts say.
The three-year deal is expected to be a club-style syndication with an average life of two years. According to the term sheet, it will be divided into a $350 million loan, and a $150 million floating-rate note (FRN). The FRN portion will be in three tranches, maturing at the end of the first, second and third year.