Initial price pointer for Turkey’s QNB Finansbank 5.5-year USD eurobonds in ‘low 7%s’

Initial price pointer for Turkey’s QNB Finansbank 5.5-year USD eurobonds in ‘low 7%s’
By Akin Nazli in Belgrade February 28, 2019

Initial price guidance at a roadshow for Turkish private lender QNB Finansbank’s 5.5-year eurobonds was announced as in the low 7%s, Reuters reported on February 28.

The book-building was expected to be completed on February 28, according to banking sources.

It was reported on February 27 that Finansbank has mandated Citi, JP Morgan, Mizuho Securities, QNB Capital, Societe Generale and Standard Chartered Bank for the eurobond issue.

A global investor call and one-on-one conference calls took place on February 27 for QNB Finansbank’s Reg S/144Abenchmark senior bond, the first senior bond from a Turkish bank since March last year, Global Capital reported on February 27.

Investor meetings for Koc eurobond
Also on February 28, Turkey’s largest conglomerate Koc Holding said in a bourse filing that it has mandated BofA Merrill Lynch, Citigroup Global Markets and JP Morgan Securities to arrange a series of investor meetings in Europe and the US, to start from March 1, for a eurobond issue worth up to $1bn.

Qatar National Bank (QNB) owns 99.88% of QNB Finansbank with only 0.12% of its shares on free-float, according to the KAP public disclosure platform. The National Bank of Greece (NBG) agreed to sell its shares in Finansbank to QNB for €2.7bn in 2015. NBG bought Finansbank for $2.8bn from local businessman Husnu Ozyegin in 2006.

QNB Finansbank shares were flat at TRY7.67 as of 13:00 local time on February 28 while the Borsa Istanbul’s benchmark BIST-100 was up 0.50% to 104,665. The annual gain on QNB Finansbank shares stood at 28% versus the 15% y/y increase on the BIST-100.

On February 21, the lender said in a bourse filing that it would not distribute a dividend from its TRY2.41bn worth of 2018 profit.

Opting against dividends
Many Borsa Istanbul-listed companies are deciding not to distribute dividends this year. They are instead aiming to strengthen their capital structures in advance of the worst of what is expected to be a tough year.

On February 27, private lender Akbank said in a bourse filing that it would not distribute dividends from its TRY5.67bn worth of 2018 net profit.

QNB Finansbank was Turkey’s fifth largest private bank by assets as of end-September while Moody’s Ratings rates the lender at Ba3/Negative and Fitch Ratings rates at BB-/Negativeaccording to an investor presentation on the lender’s 2018 financials.

The bank was Turkey’s eighth largest lender with TRY181bn worth of total assets at end-September, according to the latest data from Turkish banking association TBB.

QNB Finansbank carries some exposure to Turkish government mega infrastructure projects. In March 2018, Turkey’s 1915 Canakkale Bridge and Highway project secured €2.3bn of financing. According to reports in local media, a total of €1.6bn, representing 70% of the financing, was provided by foreign banks while the remaining €683mn, or 30%, was provided by foreign branches of Turkish banks, including Akbank, QNB Finansbank, Garanti Bank, Is Bank, Vakiflar, Yapi Kredi and Kuveyt Turk.

In March 2015, partners of Bilkent integrated health facilities (Ankara city hospital), to be built under a PPP scheme, secured a project financing loan worth €1.2bn. Some €890mn of the loan was provided by Garanti, Yapi Kredi, Denizbank, QNB Finansbank, Isbank , Siemens Financial Services and Unicredit Bank Austria.

Also in 2015the IGA Havalimani Isletmesi consortium building Istanbul Airport—a mega airport officials want to see eventually become the world’s busiest airport—took out an initial 16-year loan of €4.5bn from TC Ziraat Bankasi, Turkiye Halk Bankasi, Denizbank, Turkiye Garanti Bankasi, Turkiye Vakiflar Bankasi and QNB Finansbank, according to Bloomberg loan data. Ziraat, Turkey’s biggest bank by assets, was the largest lender with $1.5bn, while fellow state-run lenders Halkbank and Vakifbank each lent $966mn.

In February 2018, Yildiz Holding requested the largest loan ever from Turkish banks—some $6bn-$7bn—referring to the challenges if faced with its existing financing structure. The 10 banks that Yildiz addressed were Yapi & Kredi Bankasi, Akbank, TC Ziraat Bankasi, Turkiye Halk Bankasi, Turkiye Garanti Bankasi, Turkiye Is Bankasi, Turkiye Vakiflar Bankasi, HSBC Bank, Denizbank and QNB Finansbank.

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