Turkey’s Mersin Port sells $600mn of five-year eurobonds at 8.25% coupon
Turkey’s port operator Mersin Uluslararasi Liman Isletmeciligi (Mersin Port/MIP) has sold $600mn of eurobonds (US590454AC80) due 2028 at a coupon rate of 8.25% and a yield to investor of 8.50% (priced at 98.999), Reuters reported on November 9.
The paper is callable at the end of the second year. The company has not issued an official statement on the deal as yet.
Citibank (Citigroup/New York/C), DBS Bank (Singapore/D05) and HSBC (London/HSBA) acted as bookbuilders for the deal.
In July, MIP said that it was closely monitoring opportunities to refinance its $600mn of outstanding five-year eurobonds (XS2071397850) due November 2024, callable at par in November 2023.
In 2013, MIP sold the $450mn of seven-year eurobonds (XS0957598070) in question at a coupon rate of 5.875%.
At issuance, the paper was provisionally rated investment grade by both Moody’s Investors Service (Baa3) and Fitch Ratings (BBB-).
It was recorded as Turkey’s first ever infrastructure bond issue. The European Bank for Reconstruction and Development (EBRD) bought $80mn of the paper.
In 2019, to roll the existing $450mn paper, MIP sold $600mn worth of five-year eurobonds (XS2071397850) at a coupon rate of 5.375%. The EBRD acquired $90mn of the paper.
In 2013, the World Bank Group’s International Finance Corporation (IFC) provided $75mn for MIP’s East Mediterranean Hub Project by acquiring eurobonds issued by the company. In 2019, the IFC participated in the rollover of the paper by acquiring $80mn of new eurobonds.
In July, the EBRD said that it was in September set to approve a loan worth up to $50mn for the company, while the IFC said that it would also provide a loan worth up to $50mn to the MIP.
The loans will be used to finance the second phase of the construction of the East Mediterranean Hub Project.
The $408mn project was launched in 2013. Its first phase was completed in 2016. The second phase of the project aims to increase the port’s container handling capacity to 3.6mn twenty-foot equivalent units (TEU) from the current 2.6mn TEU.
The plan is to commence construction works by 4Q23. The berth and new cruise terminal are expected to become operational by end-2025.
In 2022, the port handled 2.02mn TEU of containers, down 4% y/y. Revenues rose by 10% y/y to $353mn.
MIP currently has a B/Stable credit rating from Fitch Ratings, five notches below investment grade and in line with Turkey’s sovereign ratings.
MIP is a JV that operates the Mersin Port under a 36-year concession agreement signed in 2007 with the Turkish Privatisation Administration and Turkish State Railways.
Mersin Port, launched in 1962, is located on Turkey’s Mediterranean coast. It is Turkey’s largest port in terms of total container throughput.
The port handles dry bulk, liquid bulk, containers and ro-ro cargoes. It also hosts ferryboat services carrying passengers between Turkey’s Mersin province and Northern Cyprus.
It has a number of tenants, including a vegetable oil company, grain storage company, soda ash facility and a petrol station.
Singapore-based PSA International has a 51% stake in MIP while Australia-based IFM Investors has 39% and Turkish conglomerate Akfen Holding holds the remaining 10%.
In 2005, PSA-Akfen consortium placed a winning bid of $755mn in the concession tender for the operating rights of the port.
In 2017, Akfen sold its 40% stake in MIP to IFM for a consideration of $869mn.
Many tonnes of cocaine are regularly intercepted at Mersin Port. On October 27, 610 kg of cocaine was seized at the port.
Looking at the global markets, there is no turbulence of note impacting sentiment. Turkey’s five-year credit default swaps (CDS) remain below the 400-level, while the yield on the Turkish government’s 10-year eurobonds remains below the 9%-level.
The USD/TRY rate is, meanwhile, still heading north. On September 21, the pair once again broke through the horizontal barrier set at the 27.00-level. The latest record high, registered on November 10, is 28.8050.
The Turkish government’s ‘five/10 kurus (Turkish cents, pronounced as kurush) devaluation per day policy’ in the struggle to stop the slide is still in place. As of November 14, the latest daily trench was being dug around the 28.65-level, up 3% m/m and 55% y/y.
Following the local elections to be held in March, Turkey’s policy rate will reach its peak. The finance industry will then be welcomed in for the rate-cutting party.
So far this year, Turkish issuers have sold a total of $16bn worth of eurobonds across 16 papers.
| Major eurobond issues by Turkish issuers | |||||||
| Issuer | ISIN | Coupon | Volume (USD mn) | End of placement | Maturity | UST+ | CDS+ |
| Mersin Port | US590454AC80 | 8.25% | 600 | Nov 8, 2023 | Nov 15, 2028 | 374 | 459 |
| QNB Finansbank (QNBFB) (subordinated) | XS2678233243 | 10.75% | 300 | Nov 9, 2023 | Nov 15, 2033 (/28) | 613 | 705 |
| Treasury (sukuk) | XS2689091846 | 8.51% | 2,500 | Nov 7, 2023 | Jan 14, 2029 | 394 | 491 |
| Ziraat Katilim (sukuk) | XS2699906512 | 9.375% | 500 | Nov 6, 2023 | Nov 12, 2026 | 476 | 570 |
| Eximbank | XS2692231975 | 9.00% | 500 | Oct 25, 2023 | Jan 28, 2027 | 341 | 496 |
| We Soda (UK/Ciner) | US92943TAA16 | 9.50% | 800 | Sep 28, 2023 | Oct 6, 2028 | 488 | 565 |
| Arcelik (ARCLK) | XS2695038401 | 8.50% | 400 | Sep 25, 2023 | Sep 25, 2028 | 393 | 467 |
| TSKB (TSKB) | XS2678232781 | 9.375% | 300 | Sep 19, 2023 | Oct 19, 2028 | 487 | 550 |
| Yapi Kredi Bank (YKBNK) | XS2445343689 | 9.25% | 500 | Sep 13, 2023 | Oct 16, 2028 | 486 | 550 |
| Vakifbank (VAKBN) | XS2677517497 | 9.00% | 750 | Sep 12, 2023 | Oct 10, 2028 | 464 | 527 |
| Akbank (subordinated) | XS2611752317/XS2611752663/XS2611747234 | 9.60% | 300 | Jul 25, 2023 | Jul 25, 2033(/28) | 574 | 525 |
| Treasury | US900123DJ66 | 9.125% | 2,500 | Apr 13, 2023 | Jul 13, 2030 | 597 | 396 |
| Treasury | US90014TAJ07 | 9.375% | 2,250 | Mar 8, 2023 | Mar 14, 2029 | 517 | 393 |
| Ziraat Bank | XS2581381634 | 9.50% | 500 | Jan 25, 2023 | Aug 1, 2026 | 566 | 410 |
| Eximbank | XS2395576437 | 9.375% | 500 | Jan 24, 2023 | Jan 31, 2026 | 552 | 387 |
| Treasury | US900123DG28 | 9.375% | 2,750 | Jan 11, 2023 | Jan 19, 2033 | 619 | 427 |
Table: Major eurobond sales by Turkish issuers.
In 2022, Turkish borrowers sold $12bn of eurobonds across eight tenders. The Treasury was the dominant player, raising $11bn in five tenders. It redeemed $8bn on four papers during the year.
In 2023, Turkish eurobond sellers are supposed to redeem a total of $11bn across 15 papers. In the year to date, $9bn across 13 papers has been redeemed.
On December 10, Isbank (ISCTR) is to redeem a $400mn paper (XS1003016018), which pays a 7.85% coupon.
| Upcoming eurobond redemptions by major Turkish issuers | |||||
| Issuer | ISIN | Coupon | Volume (mn) | Issuance | Maturity |
| Isbank (ISCTR) | XS1003016018 | 7.85% | $400 | Dec 10, 2013 | Dec 10, 2023 |
| Treasury | US900123CR91 | 7.25% | $2,000 | Oct 23, 2018 | Dec 23, 2023 |
Table: Upcoming redemptions by Turkish issuers.
Turkey’s finance minister Mehmet Simsek has, meanwhile, been talking about selling bonds worth $8.5bn for earthquake recovery efforts and $3bn for UAE export credits. It is unknown what type of papers will be sold and when.
| Awaited eurobond auctions by major Turkish issuers | |||||
| Up to USDbn | Sold | Type | |||
| Nov 2, 2023 | Aktifbank | SPK Approval | TRY0.75 | – | papers abroad |
| Oct 27, 2023 | Pasha Yatirim Bankasi | SPK Approval | 0.025 | – | papers abroad |
| Oct 25, 2023 | Ziraat Katilim Bankasi | SPK Approval | 0.5 | Nov 6, 2023 | sukuk |
| Oct 18, 2023 | QNB Finansbank (QNBFB) | SPK Application | 4 | – | papers abroad |
| Oct 18, 2023 | QNB Finansbank (QNBFB) | SPK Application | 1 | – | subordinated |
| Oct 9, 2023 | QNB Finansbank (QNBFB) | Board mandate | 0.3 | – | subordinated |
| Oct 5, 2023 | Destek Yatirim Bankasi | SPK Approval | 0.02 | – | papers abroad |
| Sep 28, 2023 | Mersin Liman | SPK Approval | 0.6 | Nov 8, 2023 | eurobond |
| Sep 28, 2023 | Kalibre Boru | SPK Approval | 0.075 | – | papers abroad |
| Sep 27, 2023 | TAV (TAVHL) | SPK Application | 0.75 | – | papers abroad |
| Sep 20, 2023 | Ford Otosan (FROTO) | SPK Approval | €0.5 | – | papers abroad |
| Sep 14, 2023 | Eximbank | SPK Approval | 3 | Oct 25, 2023 | eurobond |
| Sep 14, 2023 | Fiba Yenilenebilir Enerji Holding | SPK Approval | 0.2 | – | papers abroad |
| Sep 14, 2023 | Akbank (AKBNK) | SPK Approval | 2 | – | papers abroad |
| Sep 14, 2023 | Akbank (AKBNK) | SPK Approval | 2 | – | green |
| Sep 7, 2023 | Isbank (ISCTR) | SPK Approval | 2 | – | green |
| Aug 31, 2023 | Vakifbank | SPK Approval | 1 | Sep 19, 2023 | green |
| Aug 31, 2023 | Nurol Holding | SPK Approval | 0.5 | – | papers abroad |
| Aug 24, 2023 | Garanti (GARAN) | SPK Approval | 2 | – | green |
| Aug 9, 2023 | Destek Yatirim Bankasi | SPK Approval | 0.015 | – | papers abroad |
| Jul 27, 2023 | Isbank (ISCTR) | SPK Approval | GBP 0.02 | – | XS2658516732, Jul 29, 2024 |
| Jul 20, 2023 | Arcelik | SPK Approval | 0.5 | – | papers abroad |
| Jul 19, 2023 | Garanti (GARAN) | GMTN Programme Renewal | 6 | – | papers abroad |
Table: Awaited eurobond sales by Turkish issuers.
