Turkey

Covered bonds, green bonds, tier twos and senior — Turkish issuers have turned this year of lower funding needs into a meze platter of unusual and groundbreaking bonds. Francesca Young reports.

Akbank has outlined plans to broaden the reach of Turkish banks among Asian lenders beyond Japan and improve awareness of longer tenors, as it returns to the loan market for the second time this year.

Turkish banks are looking to mortgage-backed covered bonds to close asset and liability mismatches and reduce borrowing costs. In the next few years, the asset class will become a cornerstone of their funding plans.

Akbank is returning to the loan market for the second time this year, lining up one and three year tranches in euros and dollars.

Turk Eximbank has invited banks to participate in a €300m ($337m) equivalent loan. It has split the borrowing into a one year and a two year tranche.

Export Credit Bank of Turkey is raising a €300m-equivalent loan from Asian lenders that includes a three year tranche, according to bankers. It is the first time the bank has sought such a long tenor since 2006.

Competition is becoming much fiercer in the Turkish banking sector. After years of rampant loan growth in many markets, banks will have to fight much harder to find new customers and bigger margins in the future.

Turkish banks Halkbank and Turkiye Sinai Kalkinma Bankasi are refinancing one year loans and offering a premium to lenders committing in dollars.

Rating: Baa3/—/BBB-

Investors piled over $4bn into Republic of Turkey’s latest sukuk offering on Wednesday, following a cabinet reshuffle on May 22 which the market took as a positive signal amid the increasingly authoritarian rule of president Recep Tayyip Erdogan.

Republic of Turkey is looking to take its next chunk of funding in the Islamic market, just days after President Erdogan called for Muslims to reject contraception to ensure the continued growth of the Turkish population.

Turkey’s use of the public-private partnership infrastructure model has proven effective, with the healthcare sector leading the way. Underdeveloped capital markets, insufficient international bank lending and political instability, however, are some of the numerous challenges the sector faces in sustaining its progress. Max Bower reports.