Last month, Akbank issued $1 billion in five-year and 10-year notes, with the five-year tranche priced at just 3.875%. In September, Garanti’s Eurobonds became the first to benefit from new investment-grade foreign-currency ratings that Moody’s awarded in the summer to five of the biggest Turkish banks. Garanti’s new $750 million 10-year Eurobond was priced to yield 5.375%, with $600 million in five-year notes priced at 4.175%.
Isbank also issued its first bond in 2011. Halkbank issued its debut Eurobond this July, raising $750 million at what was then a record low yield for Turkish banks – 5%. "We’re starting to tap the debt capital markets," says Hakan Atilla, head of international banking at state-owned Halkbank, which the government is selling down via a secondary public offering this autumn.
Now tier 2 deals are happening. This autumn, Isbank issued a $1 billion 10-year lower tier 2 bond priced at 6%. VakifBank issued a $500 million 10-year tier 2 bond the following week, priced at 25 bps over Isbank’s deal. There are no other outstanding public tier 2 issues by Turkish banks.
"Loans-to-deposits ratios in Turkey have reached 100%, so banks are more pushed to raise new capital (as each additional business creates less return on equity)" says Mustafa Bagriacik, head of Turkey investment banking coverage at Deutsche Bank.
