Virus Risks Slowing Chinese Banks’ Deals in Key Turkish Market
The turn of events highlights how much of a game-changer the virus might be for the Chinese banking units operating in Turkey.
(Bloomberg) -- The coronavirus outbreak threw off track a major loan deal that Chinese banks were arranging in Turkey, a sign that the virus’s spread could slow efforts by the Asian nation’s lenders to expand in a key market.
Talks between Turkey’s IC Yatirim Holding AS, China Merchants Group Ltd. and a group of Chinese banks to refinance a $2.3 billion loan are being delayed because of disruptions stemming from the virus, according to people with knowledge of the matter.
Discussions to refinance the loan used to build a third suspension bridge across Istanbul’s Bosporus strait may drag on past April when the parties had hoped to close the deal, the people said, asking not to be identified because the matter is private. Talks are being delayed because bankers and executives can’t travel between Turkey and China and are communicating via video link, they said.
The turn of events highlights how much of a game-changer the virus might be for the Chinese banking units operating in Turkey.
Lenders from the world’s second largest economy have been pursuing a rapid expansion in Turkey’s financial industry, chasing massive project finance deals. The Asian nation’s monetary authority extended a $1 billion swap in 2019 to help boost foreign reserves of its Turkish counterpart.
Istanbul Bridge Deal
IC Yatirim Holding and six affiliates of China Merchants Group Ltd. have been holding discussions with lenders to refinance the loan taken out in 2013. Industrial & Commercial Bank of China Ltd. and Bank of China Ltd. are leading the talks to refinance the loan, which matures in 2022, with a new seven-year facility of about $2.2 billion, the people said.
Representatives for IC Yatirim and Bank of China declined to comment. ICBC and China Merchants Group didn’t immediately respond to a request seeking comment.
Chinese investors agreed in December to buy 51% of the company operating the bridge for a consideration of $688.5 million. They bought Astaldi SpA’s entire 33% stake and an 18% stake from IC Yatirim, which still holds 49% of the operating company.
The bridge and roads have been in operation since 2016 after the government awarded a consortium of IC Yatirim and Astaldi to build and operate the roads for a total price of $3 billion in 2012. The operator’s concession will end in 2027, according to the contract.
--With assistance from Vinicy Chan, Young-Sam Cho and Jun Luo.
To contact the reporters on this story: Ercan Ersoy in Istanbul at eersoy@bloomberg.net;Asli Kandemir in Istanbul at akandemir@bloomberg.net
To contact the editors responsible for this story: Stefania Bianchi at sbianchi10@bloomberg.net;Onur Ant at oant@bloomberg.net;Shirley Zhao at xzhao306@bloomberg.net
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