Foreign banks have competitive advantage in refinancing Turkey’s mega deals: Banker
DHA photoForeign banks may lead the way in refinancing mega projects in Turkey, as they have already started talks for the refinancing of existing loans by issuing foreign exchange-based bonds, giving them a competitive advantage over their local rivals, said a senior representative from Turkey’s Garanti Bank in an interview with Reuters.
Garanti Bank Vice President Ebru Edin said Turkish banks may lag behind their foreign rivals in this field as they did not have the authority to act as intermediaries in the issuance of foreign exchange-based bonds.
“After the construction period of the mega projects is completed and they start to create cash flows, the financing of these projects becomes very attractive for foreign lenders, which can offer the choice of bond issuing, in contrast to local lenders. We believe that many projects will prefer this kind of financing,” she said.
“Due to a problematic regulation here, Turkish banks, however, cannot act as an intermediary in foreign exchange-based bond issuance. A regulation is needed here to enable us to not miss opportunities in this market,” added Edin.
The first example of refinancing by foreign lenders acting as an intermediary in bond issuance was seen in the Mersin Port.
Edin noted the need for refinancing has been increasing as the rates have been decreasing.
She also said public-private-partnership (PPP) projects were quite successful financing projects, but foreign lenders were more active in these projects than their local rivals as they offered 150-200 lower base points.
Edin noted that Turkey did not need more energy investments with the exception of a number of renewable energy projects.
“Otherwise, Turkey will see a serious supply surplus in the next four-five years,” added Edin.
“If the current renewable energy projects had not become operational this year, Turkey would have needed to import an additional $2.5 billion worth of natural gas… We believe that the financial support to renewables needs to continue in a bid to decrease foreign dependency on energy and ensure a more sustainable growth,” she said.