Turkish Bank Sweetens Dual-Currency Loan After Lira Drop

(Bloomberg) -- Akbank TAS is offering lenders improved returns on its latest loan as Turkey’s second-biggest bank by market value seeks to navigate the country’s financial crisis.

The syndicated dual-currency loan being raised by Istanbul-based Akbank is set to be an acid test for the country’s other banks as they race to refinance $6 billion of debt by the end of the year. It may also determine the nation’s ability to tap overseas debt markets amid U.S. sanctions that have contributed to a 41 percent plunge in the lira against the dollar and cooled an economy battling soaring inflation.

Akbank raised the interest margins of the loans by as much as 75 basis points compared with the pricing offered two months ago, when it first invited lenders to join, according to people familiar with the matter. It also more than doubled upfront fees, said the people, who asked not to be identified because they aren’t authorized to speak publicly. Akbank declined to comment.

The lender is coming to market as Turkish President Recep Tayyip Erdogan on Thursday attacked the central bank for continuously missing inflation targets before monetary policy makers were due to deliver their interest rates decision. The central bank then raised the one-week repo rate by 625 basis points to 24 percent, triggering a rally in the lira.

At least nine lenders have to complete annual foreign-currency loan syndications by year-end, data compiled by Bloomberg show, leaving an industry heavily reliant on overseas funding little time to conclude deals often involving dozens of global banks. Akbank will face a further increase on the spreads if its credit rating falls to B or B2 or below, the people said.

Here are the revised terms:

TranchesRevised MarginOriginal Margin
(A) USD 367-day bullet term loanL+200L+130
(B) EUR 367-day bullet term loanEuribor+190Euribor+120
(C) USD 2Y+1 business day term loanL+290L+215
(D) EUR 2Y+1 business day term loanEuribor+240Euribor+190
Ticket levelsRevised Upfront Fees
(basis points)
Original Upfront Fees
(basis points)
(A), (B)
Mandated lead arranger7530
Lead arranger7025
Arranger6522.5
(C,) (D)
Mandated lead arranger12060
Lead arranger11050

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