European bank invests in Turkey’s longest tenor corporate bond

LONDON/ISTANBUL

The European Bank for Reconstruction and Development (EBRD) has said it will invest 70 million Turkish Liras (approximately 21 million euros) in a four-year bond to major Turkish contractor YDA to finance a state-of-the-art hospital, in a written statement late July 25.

“YDA’s latest bond issuance backed by the EBRD will finance a state-of-the-art hospital in the Central Anatolian city of Konya and refinance part of the company’s short-term debt,” said the bank.

The EBRD noted it was strengthening Turkey’s capital markets by investing in the country’s longest tenor corporate bond.

The EBRD will invest 70 million liras in the four-year bond issued by the YDA. The senior unsecured local currency bond was part of a 250-million-lira (approximately 74 million euros) issuance in two equal tranches, with four- and two-year maturities respectively, according to the EBRD.

The four-year tranche uses the Turkish Lira Interbank Offer Rate (TRLIBOR) as its benchmark rate, which allows for effective interest rate hedging and wider investor participation.

The bond was being raised to finance a state-of-the-art hospital in Konya and to refinance part of YDA’s short-term debt, noted the bank.

The hospital will be built by a construction subsidiary of YDA as part of a public-private partnership (PPP) under which the private developer will provide building maintenance and non-clinical services, while the medical services will be provided by the Turkish Health Ministry.

The EBRD had previously arranged a 147.5-million-euro syndicated loan for the development of the Konya hospital. It is expected to become operational in 2019. This was the EBRD’s second investment in YDA bonds, according to the statement.