Two Turkish Banks Are Sweetening Loan Prices After Market Jolt

Akbank T.A.S and T.C. Ziraat Bankasi A.S. are offering to pay more for their foreign-currency borrowings after President Recep Tayyip Erdogan’s sacking of the third central bank governor in less than two years roiled Turkish markets.

Both lenders were in the syndication process when the turmoil hit. Akbank revised the all-in yield to 250 basis points over Libor and 225bps over Euribor to refinance debt due next month, according to its spokesperson.

That implies a 40bps boost to Akbank’s margins according to Bloomberg calculations, similar to the increase in state-run Ziraat’s dual-currency loan, according to a person familiar with the matter who isn’t authorized to speak publicly and asked not to be identified. A spokesperson for Ziraat, whose chief executive officer stepped down on Friday after 10 years on the job, wasn’t available to comment on the financing.

Two Turkish Banks Are Sweetening Loan Prices After Market Jolt

The higher cost of borrowing comes after Turkey’s stocks, bonds and the lira tumbled this week as the shock dismissal of the market-friendly central bank chief Naci Agbal on Saturday triggered concern a period of policy orthodoxy that had briefly restored the lira’s fortunes has ended.

Akbank, which is among the first to refinance annually, has historically set benchmark pricing for other Turkish bank borrowers. Exactly a year ago, it added as many as 65bps to the margin of its loan as a global funding squeeze hit markets amid the coronavirus pandemic. In 2019, it led a cut in loan margins as market conditions improved.

Akbank is refinancing roughly $630 million of existing loans that are due next month. Based on the revised pricing, the margins have been boosted to 215bps over Libor and 190bps over Euribor, according to Bloomberg calculations. Ziraat, which is refinancing the equivalent of $1.1 billion due in April, lifted its loan margins to 210bps over Libor and 185bps over Euribor, the person said.

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