Turkey rate cuts prompt industrialists to request reduced loan costs
The Turkish central bank’s interest rate-cutting spree has prompted two major corporations to request lower interest rates on their borrowings.
Indebted conglomerates Doğuş Group and Yıldız Holding, who have already sought to restructure billions of dollars in loans since a currency crisis erupted in Turkey in 2018, are now seeking more favourable repayment terms from banks, Reuters reported on Monday.
Yıldız said it is in discussions with banks over reducing rates on a syndication deal first agreed in April 2018, Reuters said. The initial refinancing was worth around $5.5 billion. Meanwhile Doğuş is in talks with 12 banks to adjust rates on 2.3 billion euros of loans that it refinanced last year, the news wire said, citing deputy chairman Hüsnü Akhan.
“Of course the interest rate was set in line with market conditions at that time,” Akhan told Reuters. “We are currently in talks with banks to adjust the interest rate according to current market conditions with falling rates.”
Interest rates on commercial loans provided by state-run banks have tumbled to less than 10 percent from more than 20 percent following the currency crisis, thanks in part to the central bank slashing interest rates to 11.25 percent last month from 24 percent in July. Non-government banks have been forced to follow suit, cutting their own loan costs.
Akhan said the talks are expected to be completed in a few days. Both firms said they continued to sell assets as part of their previous restructuring deals, Reuters reported.