Turkey is keeping Standard Chartered busy this season. Well versed in Turkish future flows, the arranger is understood to have a mandate from each Turkiye Is Bankasi (Isbank) and Finansbank.
The originators are pursuing different routes. Finansbank is going unwrapped, while Isbank is reportedly having one tranche wrapped by Ambac and another by MBIA. Both are scheduled to price the week of Nov. 8.
Named after the strait where Europe and Asia meet in Istanbul, Finansbank's issuing vehicle Bosphorus Financial Service Limited will place a five-year $200 million deal backed by electronic money receivables, known as diversified payment rights (DPRs). Moody's Investors Service has rated the deal Baa3'. A stalwart of the sector, Standard Chartered has brought a handful of Turkish financial future flows to market in the last 12 months. The sole lead is marketing the Finansbank deal to a broad audience of investors in the U.S., Europe, and the Persian Gulf region, according to a well-placed source.
For the arranger, Mayer, Brown Rowe & Maw is legal counsel on the cross-border front and Istanbul-based Pekin & Pekin on the domestic front. White & Case advised the originator.
In the wake of a sovereign upgrade, Moody's had raised the foreign currency deposit rating on Finansbank to B2' from B3', along with 12 other major Turkish banks. Improved external liquidity played a major role in the upgrades.
Finansbank has a local currency rating of Baa3', which serves as a ceiling on its securitizations. The originator will take proceeds from the upcoming transaction - due out later this year - to retire an existing $150 million deal also backed by DPRs, according to a report by Moody's
That deal is most likely a facility arranged by Standard Chartered in November 2003. The maturity was set at one year, with an option to extend to five years. Fitch Ratings rated that transaction BBB-', according to the Finansbank Web site.
The eligible DPRs are primarily offshore dollar-, euro- and pound sterling flows linked to exports and other payments. While Turkish flows - payment orders between Turkish banks settled outside the country - are included, they are weighted differently and capped as well, since they are deemed riskier than offshore payments, according to the Moody's presale report.
Total DPR flows boomed 53% in 2002 and 44% in 2003, respectively. The number of DPR transactions averaged 7,694 a month for the first half of 2004, compared with 4,673 for the first half of 2003.
On top of projected steep debt-coverage levels, different amortization triggers help anchor the transaction in investment-grade territory. Reflecting Moody's relative confidence in the Turkish banking sector, the transaction rating is four rungs above the B1'-rated sovereign.
Earlier this month, Finansbank closed a $200 million, 10-year subordinated deal that carried political risk insurance from Sovereign Risk Insurance, the first of its kind out of Turkey. Led by Merrill Lynch, the transaction priced at 9%. Sovereign is a 50/50 joint venture between Ace Bermuda Insurance and XL Insurance.
Isbank: First to hit
S&P high grade?
Meanwhile, Isbank is heard coming with a deal, which appears to be a prime candidate for the first investment grade Turkish securitization from Standard & Poor's (S&P). The agency recently upped Isbank - along with other top-tier Turkish banks - to BB-' from B+'. A DPR deal from that originator is reported to be approaching the marketing phase, with a structure similar to a transaction closed by Turkiye Garanti Bankasi (Garanti) last June, sources said.
"It looks like it's going to be a mirror image of the Garanti deal," said a London syndicate source away from the transaction.
Sized at a total $300 million, the Garanti deal had one $150 million five-year tranche wrapped by MBIA and a $150 million eight-year tranche by Ambac. Moody's gave it a shadow rating of Baa3', while S&P's underlying rating was not disclosed.
Ambac had indicated that it was unlikely to return to Turkey on a deal that didn't earn investment grade from S&P, suggesting the Isbank transaction is likely to be the first. Official news on the transaction is expected out shortly.
Turkey opened the door for DPR deals from Emerging Markets in 2000, with a $125 million deal by Finansbank via Banc of America Securities.
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