The European Bank for Reconstruction and Development (EBRD) is moving to deepen Turkey’s local capital markets as Rönesans Holding, one of the country’s largest construction and infrastructure companies, issues its first Turkish lira-denominated floating-rate bonds of three-year maturity.
Acting as an anchor investor, the Bank is investing TL 100 million (€31 million equivalent) in the TL 200 million (€61 million equivalent) bond issuance, the first in Turkey to use TRLIBOR, the Turkish Lira Interbank Offered Rate, as its benchmark rate.
It is part of a larger TL 500 million (€153 million) bond programme of which two-thirds have already been issued. The capital raised will cover the company’s funding needs and support the currency composition of Rönesans Holding’s balance sheet.
Jean-Patrick Marquet, EBRD Director, Turkey, said: “Bonds enable large companies to draw on global pools of capital for major projects. We are pleased to be able to support Rönesans Holding in pioneering the floating-rate bond based on TRLIBOR as its benchmark rate which makes it accessible to international investors. We also welcome the longer tenor of the bond – a rare feature for the local market, where the average bond maturity in 2015 was 1.9 years – and the higher standards of transparency and corporate governance that come with it. All these will certainly be a recipe for investor interest in future bonds.”
Rönesans Holding and the EBRD have agreed on a plan of action to further improve the company’s corporate governance and disclosure, raising business standards well beyond Turkey’s current regulations to best international practice.
İpek Ilıcak Kayaalp, Rönesans Holding’s Chairperson, added: “This marks another landmark transaction between the EBRD and Rönesans. After previous cooperation in commercial real estate development in Russia and health care public-private partnerships (PPPs) in Turkey, we are excited to further broaden our relationship with the EBRD through this capital market transaction. Innovation is one of our core values and we are proud to be part of this first-of-its-kind issue, which will contribute to the depth of the Turkish corporate bond market.”
Investment brokerage company Ak Yatırım Menkul Değerler A.Ş. acted as the arranger.
Investment in Rönesans Holding’s bond issuance marks the first transaction under the EBRD’s recently approved TL 700 million programme dedicated to supporting Turkish lira-denominated bonds.
The Bank’s investments under this programme promote longer tenor and greater transparency and aim to attract a wider pool of international investors to Turkish capital markets. Developing debt and equity capital markets in Turkey is one of the EBRD’s top priorities there, as set out in the Bank’s strategy for Turkey.
The proceeds from the EBRD investment will be mainly used for the construction of a €342 million state-of-the-art hospital in Elazig, Eastern Anatolia, under a PPP scheme, and also for refinancing a portion of the existing debt of Rönesans Holding’s balance sheet.
The company, through its subsidiary Rönesans Saglık Yatırım A. Ş., or Rönesans Medikal, and in partnership with the global infrastructure firm Meridiam, is building and providing maintenance to six PPP hospital-complex projects. These are part of the €12 billion Turkish government programme to build or expand about 60 hospitals across the country in cooperation with the private sector.
Rönesans Holding is a diversified holding, founded in 1993, with activities in construction, real estate and energy. It operates in Turkey, Russia and other CIS countries, as well as in the Middle East and North Africa, and is a longstanding partner of the EBRD.
The Bank has been active in Turkey since 2009 and currently operates from offices in Istanbul, Ankara and Gaziantep. To date, it has invested over €7 billion in the country through 180 projects in energy, finance, agribusiness, industry and infrastructure. About half of these projects promote sustainable use of energy and resources.
Turkey was the top destination for EBRD financing in 2015, with €1.9 billion invested that year alone.
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