Turkiye’s Mersin Port sells $600 million of five-year eurobonds at 8.25% coupon

Turkiye’s port operator Mersin Uluslararasi Liman Isletmeciligi (Mersin Port/MIP) has sold $600mn of eurobonds (US590454AC80) due 2028 at a coupon rate of 8.25% and a yield to investor of 8.50% (priced at 98.999), Reuters reported on November 9.

The paper is callable at the end of the second year. The company has not issued an official statement on the deal as yet.

Citibank (Citigroup/New York/C),DBS Bank (Singapore/D05) and HSBC (London/HSBA) acted as bookbuilders for the deal.

In July, MIP said that it was closely monitoring opportunities to refinance its $600mn of outstanding five-year eurobonds (XS2071397850) due November 2024, callable at par in November 2023.

In 2013, MIP sold the $450mn of seven-year eurobonds (XS0957598070) in question at a coupon rate of 5.875%.

At issuance, the paper was provisionally rated investment grade by both Moody’s Investors Service (Baa3) and Fitch Ratings (BBB-).

It was recorded as Turkiye’s first ever infrastructure bond issue. The European Bank for Reconstruction and Development (EBRD) bought $80mn of the paper.

In 2019, to roll the existing $450mn paper, MIP sold $600mn worth of five-year eurobonds (XS2071397850) at a coupon rate of 5.375%. The EBRD acquired $90mn of the paper.

In 2013, the World Bank Group’s International Finance Corporation (IFC) provided $75mn for MIP’s East Mediterranean Hub Project by acquiring eurobonds issued by the company. In 2019, the IFC participated in the rollover of the paper by acquiring $80mn of new eurobonds.

In July, the EBRD said that it was in September set to approve a loan worth up to $50mn for the company, while the IFC said that it would also provide a loan worth up to $50mn to the MIP.

The loans will be used to finance the second phase of the construction of the East Mediterranean Hub Project.

The $408mn project was launched in 2013. Its first phase was completed in 2016. The second phase of the project aims to increase the port’s container handling capacity to 3.6mn twenty-foot equivalent units (TEU) from the current 2.6mn TEU.

The plan is to commence construction works by 4Q23. The berth and new cruise terminal are expected to become operational by end-2025.

In 2022, the port handled 2.02mn TEU of containers, down 4% y/y. Revenues rose by 10% y/y to $353mn.

MIP currently has a B/Stable credit rating from Fitch Ratings, five notches below investment grade and in line with Turkiye’s sovereign ratings.

MIP is a JV that operates the Mersin Port under a 36-year concession agreement signed in 2007 with the Turkish Privatisation Administration and Turkish State Railways.

Mersin Port, launched in 1962, is located on Turkiye’s Mediterranean coast. It is Turkiye’s largest port in terms of total container throughput.

The port handles dry bulk, liquid bulk, containers and ro-ro cargoes. It also hosts ferryboat services carrying passengers between Turkiye’s Mersin province and Northern Cyprus.

It has a number of tenants, including a vegetable oil company, grain storage company, soda ash facility and a petrol station.

Singapore-based PSA International has a 51% stake in MIP while Australia-based IFM Investors has 39% and Turkish conglomerate Akfen Holding holds the remaining 10%.

In 2005, PSA-Akfen consortium placed a winning bid of $755mn in the concession tender for the operating rights of the port.

In 2017, Akfen sold its 40% stake in MIP to IFM for a consideration of $869mn.

Many tonnes of cocaine are regularly intercepted at Mersin Port. On October 27, 610 kg of cocaine was seized at the port.

Looking at the global markets, there is no turbulence of note impacting sentiment. Turkiye’s five-year credit default swaps (CDS) remain below the 400-level, while the yield on the Turkish government’s 10-year eurobonds remains below the 9%-level.

The USD/TRY rate is, meanwhile, still heading north. On September 21, the pair once again broke through the horizontal barrier set at the 27.00-level. The latest record high, registered on November 10, is 28.8050.

The Turkish government’s ‘five/10 kurus (Turkish cents, pronounced as kurush) devaluation per day policy’ in the struggle to stop the slide is still in place. As of November 14, the latest daily trench was being dug around the 28.65-level, up 3% m/m and 55% y/y.

Following the local elections to be held in March, Turkiye’s policy rate will reach its peak. The finance industry will then be welcomed in for the rate-cutting party.

So far this year, Turkish issuers have sold a total of $16bn worth of eurobonds across 16 papers.

In 2022, Turkish borrowers sold $12bn of eurobonds across eight tenders. The Treasury was the dominant player, raising $11bn in five tenders. It redeemed $8bn on four papers during the year.

In 2023, Turkish eurobond sellers are supposed to redeem a total of $11bn across 15 papers. In the year to date, $9bn across 13 papers has been redeemed.

On December 10, Isbank (ISCTR) is to redeem a $400mn paper (XS1003016018), which pays a 7.85% coupon.

Turkiye’s finance minister Mehmet Simsek has, meanwhile, been talking about selling bonds worth $8.5bn for earthquake recovery efforts and $3bn for UAE export credits. It is unknown what type of papers will be sold and when.

Source: intellinews

Image: aa

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button