Turkey’s Akbank, Turk Eximbank increase loan pricing

Two Turkish banks have increased pricing on two syndicated loans to encourage international lenders to join the deals as the country’s financial crisis continues, Reuters news agency reported on Tuesday, citing banking sources.

Akbank and Turk Eximbank have increased their pricing on a US$930m loan and a US$350m loan to around 200bp for one-year tranches and around 300bp for two-year tranches respectively, Reuters reported.

The country is bracing for further financial turbulence as the Turkish lira has depreciated 40 percent since the beginning of the year.  The foreign currency debt of Turkish firms totals about 65 percent of GDP compared with 30 percent in 2007 with the loans are becoming increasingly difficult to repay as the lira slides. 

“Pricing on Akbank’s loan has increased following discussions with lead banks and feedback from the wider banking group,” Reuters quoted a senior banker said.

Turkey’s banks have to refinance US$6.4bn of syndicated loans before the end of the year, according to LPC data, as the country’s firms face an uphill struggle to repay foreign currency debt, the agency noted.

Fitch on Tuesday warned of “significant and widespread downside risks” as the currency crisis hits economic activity while cutting its outlook for economic growth in Turkey.

Turkey’s five-year sovereign credit default swap rates were 574bp on Tuesday, Reuters said.

“They are hoping that the new pricing will unlock some liquidity now that Turkey is quieter. It will be interesting to see what (international) banks will support,” the agency quoted one senior banker as saying.