January 10, 2018 / 8:14 AM / a year ago

Turkey's Halkbank looks to get loans, issue bonds when conditions are right

ISTANBUL (Reuters) - Turkey’s Halkbank is looking to secure syndicated loans and issue foreign currency bonds when the conditions are right, it said on Wednesday, in what would be its first such foreign funding in more than a year.

A street vendor sells roasted chestnuts in front of a branch of Halkbank in central Istanbul, Turkey, January 10, 2018. REUTERS/Murad Sezer

The majority state-owned bank did not roll over its last syndicated loan in July 2017, which was secured a year earlier. Its last eurobond issuance, for $500 million, was in June 2016.

“According to our bank’s 2018 growth strategy and funding plans, debt instruments such as foreign currency bonds and syndication loans may come onto our agenda when appropriate conditions are achieved,” the bank said in a written response to questions from Reuters. It did not say what the conditions were.

A U.S. jury last Wednesday found Halkbank executive Mehmet Hakan Atilla guilty of helping Iran evade U.S. sanctions, convicting him on five counts, including bank fraud and conspiracy.

Halkbank (HALKB.IS), the fifth largest Turkish bank by assets, has said all its transactions were in line with local and international laws.

Turkish President Tayyip Erdogan on Tuesday called the U.S. case against Atilla a “political coup attempt” and a joint effort by the CIA and FBI to undermine Ankara.

Analysts have voiced concern that the United States could impose fines on Turkish banks. Turkey has said it will take any necessary measures to protect its banks from the potential impact of the case.

While Halkbank’s shares rose by 17 percent last year, they sharply underperformed a 32 percent surge in Istanbul’s index of bank stocks .XBANK.

Yields on its U.S. dollar-denominated senior notes maturing in 2021 900150AD5= spiked to their highest in 11 months at the end of the year, as the trial was going on, although they have since come off.

Halkbank reduced its foreign funding and cut back its foreign currency position by some $2.2 billion in the year to September, as funding costs rose, according to one banking analyst, who declined to be identified because of the sensitivity of the topic.

Halkbank declined to comment on that figure.

Halkbank said it would continue to focus on lira funding resources and would also continue to provide loans to small- and medium-sized enterprises, in line with its growth strategy.

“Our bank will continue to use current financing opportunities from correspondent banks with bilateral agreements and international investment and development banks effectively, as well as new capital market instruments.”

It also said it had allocated some $7.6 billion in project financing loans for 63 projects as of this month and allocated loans as guaranteed in Turkey’s planned North Marmara Highway Project.

Separately, it said on Monday it expects 17 percent growth in loans and 16 percent growth in assets in 2018 from last year.

Reporting by Ebru Tuncay; Writing by Ezgi Erkoyun; Editing by Daren Butler and Adrian Croft

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