Turkey’s Marti Hotels Mulls Convertible Bond as Bookings Pick Up

Turkey’s Marti Hotels & Marinas may issue convertible bonds to finance growth and sees the outlook brightening for tourism over the next year as the impact of the coronavirus outbreak begins to fade.

“We may sell five-to-seven year convertible bonds toward the end of the year, if market conditions allow,” chief executive Emre Narin said by phone on Wednesday. “That could enable us to boost Marti’s standing in markets.” Alternatively, the company may decide to increase capital through a rights issue.

Turkey’s tourism industry is pinning hopes on an acceleration in vaccinations, even as the number of virus cases rises ahead of summer. The total number of inoculations was 16.3 million as of Friday, in the country of 84 million. However, daily cases reached 40,806, the second-highest in Europe after France.

Tourism income, a key item in reducing the nation’s current account deficit, dropped 65% to $12 billion in 2020. The government aims to double it this year.

Narin said there was “an intense flow of reservations” from Russia and expects visitors from Western Europe and the U.K. to join the rush as early as June. “The tourism season may extend to November this year,” he said, predicting a return to pre-pandemic levels in 2023.

Convertible bonds, which make fixed-income interest payments but can also be converted to shares, are rare in Turkey. Hotels REIT Akfen converted a bond it issued in 2018 to equity late last year. Polyester manufacturer Sasa got approval to sell convertible bonds, but hasn’t done so yet.

Marti Hotels and its unit Marti REIT, both listed on Borsa Istanbul, restructured about $128 million in debt to Denizbank in March, clinching a grace period of two years that Narin thinks will enable the group to recover from the pandemic-induced slump.

Marti shares rose 10% this year, compared to a 29% gain for Borsa Istanbul’s tourism index.

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.