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Background YDA Insaat Sanayi ve Ticaret A.S. sought to raise long-term funding through the country’s local capital markets in order to refinance existing debt and provide equity supplies for new PPP projects. These were the key drivers behind the company’s TRY250mn issuance, a notable deal for its timing and execution, tenor, and deal size. Two of primary objectives for the deal were to push the tenor beyond the two-year mark, and price the deal in against the TRLibor in a bid to eliminate non-hedgeable interest rate exposure – both of which were achieved against a backdrop of significant volatility following the coup attempt and S&P sovereign credit rating downgrade. Transaction BreakdownFollowing a week-long deal roadshow with 21 different institutional investors in Turkey and Europe, YDA issued TRY250mn, split equally between 2-year and 4-year tranches. This was the company’s first bond issue and only the third in the Turkish market to be based on TRLibor as a reference point, representing an important step in terms of using a reference rate, demonstrating the use of a different index in the market and eliminating non- hedgeable interest rate exposure. With bond tenors in Turkey typically concentrated around two years, and limited 3-year issuances during the period between 2010 and 2015, it was notable to see YDA raise 4-year money – and impressive, given the timing of the execution. |
The deal launched on 22 July, just one week after the coup attempt, and two days after S&P downgraded the country’s sovereign rating to junk. It is currently the longest tenor achieved on a local currency corporate bond in Turkey, and the biggest single TRY- denominated issuance in 2016.
YDA also worked closely with the EBRD to improve its disclosure practices in a bid to increase its attractiveness to foreign investors, and set a benchmark for other corporates in the country.
In terms of investor uptake, 60% of the notes were picked up by domestic institutional investors, 28% international institutional investors, and 12% domestic retail investors.
