Garanti, Turkeys third largest privately-owned bank,
this week sealed the refinancing of a E600 million loan deal,
at an overall price of Libor + 2.5%. The original loan, granted
in May last year, carried an interest rate of Libor + 0.7%.
The deal underlined how Turkeys largest financial
institutions have been able to keep foreign funds flowing this
year in sharp contrast to banks in most of eastern and
central Europe, who are struggling to refinance external
Garantis deal followed Yapi Kredis success in
securing $410 million worth of dollar and euro loans last
Other institutions, such as Akbank and Vakif, are also
looking to refinance loans for last year, and are likely to
succeed, according to analysts and bankers arranging the
Their international funding prospects are in stark contrast
to banks in Russia, for example, where even financial
institutions that were previously popular among foreign lenders
have failed to attract any financing this year at any
The contained levels of leverage at Turkish banks, the
diversity of their funding sources, and their ability to
provide their regular lenders with trade finance business have
contributed to their success in the international markets. They
have been able to borrow at what Commerzbank emerging market
analyst Luis Costa described as extremely tight and
Garantis pricing of 2.5% over Libor was more than
double what it would have paid two years ago but a peer
such as state-owned Ukreximbank, the first Ukrainian borrower
to attempt to raise external funding since last year, is now
contemplating interest rates closer to 8% over Libor.
The Croatian Bank for Reconstruction and Development (HBOR)
is paying about 4% for a much smaller loan of E100 million.
David Pepper, head of structured loans for CEMEA at WestLB
in London, said: Look at what the top tier Turkish
financial institutions are paying compared to whats being
paid by other emerging market bank borrowers, there is no
comparison. Its an anomaly within the market
always has been and probably always will be.
Turkish banks have significant volumes of trade
related and treasury business to push the way of the banks.
This is important in an environment where the ability of a
borrower to consistently deliver profitable ancillary business
has become more crucial than ever before.
Analysts have also cited the low level of non-performing
loans within the Turkish banking system, compared to other
eastern European countries, and the small foreign exchange
exposure as more of its strengths.
Costa said: If you take a look at the loan books for
the entire banking system, in Turkey were talking about
30% to 35% of foreign exchange lending relative to the total
books, which suggests theyre in a much better shape than