A syndication proposal for a $100 million loan has been withdrawn from the international markets by the Turkish Export Credit Bank (Teximbank) on instructions from the treasury, say banking sources. The treasury feared it might set too high a benchmark for Turkish risk, they add.

Offered through Daiwa Europe, the deal would have been for two years with a one year put option at a proposed rate of about 11/8 per cent above the London interbank offered rate (Libor), with fees of 65 basis points. However, bankers say it met with a weak market response, as institutions were prepared to underwrite only small amounts at expensive rates. Senior Teximbank officials also say there was an inadequate margin between the deal as it was evolving, and the institution’s own lending programme.

Due to the economic crisis and successive downgrades by US risk rating agencies, the international markets are still wary of Turkish risk. Treasury officials say they will not approach the commercial markets again for sovereign balance of payments support until they can be sure of a solid and cost effective deal. Banking sources say the Teximbank offering has been withdrawn before it could seriously impede a gradual restoration of international confidence.

Teximbank itself wanted the funds to support its expanded programme of export credits in support of Turkish goods and services. The institution has extended about $700 million in such credits since the beginning of June, say its senior officials. For the present, it can carry these loans on its own resources, but eventually will be seeking fresh external funding of not less than $500 million, they add.