Akbank signs $980 million loan in litmus test for Turkish banks

Akbank of Turkey signed a one-year syndicated loan of $980 million in dollars and euros at more than double the spreads of a similar loan in March.

The deal, which the bank was forced to delay since August due to a currency crisis in Turkey, provides a litmus test of the ability of Turkish banks to borrow on international markets. The institutions face debt repayments of about $6.4 billion by the end of the year, including the Akbank commitments met on Thursday.

The loan’s costs were set at Libor plus 275 basis points for the $285 million portion of the loan demoninated in dollars and at Euribor plus 265 basis points for the 591 million-euro tranche, Akbank said in a statement on Thursday. The lender, which was rolling over a $945 million loan secured a year ago, had signed a loan of $1.25 billion back in March at an average spread of 130 basis points.

Investors are concerned about the ramifications for Turkish banks of a slump in the lira’s value that has reached almost 40 percent this year. Financial institutions are in the firing line due to worries about rising bad debts and the unhedged foreign currency loans of Turkish corporates that total about $220 billion.

Akbank's shares rose 0.3 percent to 6.65 liras at 12:51 p.m. in Istanbul. The gain reduced losses over the past year to 26 percent. Akbank is 48.9 percent owned by Sabanci Holding, one of Turkey's largest industrial conglomerates, with the remaining shares publicly listed.