Istanbul Airport Group Is Said to Get Extra $1.2 Billion Loan

(Bloomberg) -- The consortium formed to build one of the world’s biggest airports secured an additional 1 billion-euro ($1.2-billion) loan to help complete the first phase, according to four people with knowledge of the plan.

The five-member group of local contractors agreed to the extra facility with domestic lenders already involved in the project, said the people, who asked not to be identified because the plan is still confidential. The banks, which had initially provided a 16-year loan in 2015 of 4.5 billion euros, will allocate the debt in proportion to their existing exposure, the people said.

The extended facility comes after an emergency rate hike by the central bank on Wednesday aimed at stemming a slide in the lira that is threatening to undermine the nation’s banking industry. President Recep Tayyip Erdogan, who has publicly opposed any moves to raise interest rates, has piled pressure on banks to keep extending loans at interest rates that barely compensate them for inflation.

The government was considering giving the consortium, known as IGA Havalimani Isletmesi AS, an unspecified amount of time before requiring it to start paying rent, set at more than $1 billion annually for 25 years, Transport Minister Ahmet Arslan said last month. The consortium, which won the contract in an auction in 2013, declined to comment.

Mega Airports

The 10.2 billion-euro airport, located on the Black Sea coast to the northwest of Istanbul, will be able to serve 200 million passengers when completed in 2028. Turkey is building the airport to support the expansion of its flagship carrier Turkish Airlines, which is positioning itself to compete with European and Gulf airlines using Istanbul as alternative hub to London, Frankfurt and Dubai. Dubai is planning a second airport with ultimate capacity exceeding 220 million passengers.

Turkey’s six-runway airport is designed to handle 90 million passengers a year in its first phase, which is scheduled to open in October.

The group took out the initial loan from TC Ziraat Bankasi AS, Turkiye Halk Bankasi AS, Denizbank AS, Turkiye Garanti Bankasi AS, Turkiye Vakiflar Bankasi TAO and QNB Finansbank AS. Ziraat, Turkey’s biggest bank by assets, was the largest lender with $1.5 billion, while fellow state-run lenders Halkbank and Vakifbank each lent $966 million to the project, according to loan data on Bloomberg.

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