EBRD invests in lira-denominated bond by Turkey’s YDA Group

By Olga Rosca
@olgarosca


TL 40 million to support a key investor in infrastructure PPP projects
 
The European Bank for Reconstruction and Development (EBRD) is subscribing to TL 40 million (€14 million equivalent) of a bond issue by YDA İnşaat Sanayi ve Ticaret A.Ş, a construction and infrastructure subsidiary of the Turkish conglomerate YDA Group.
 
The TL 200 million (€70 million equivalent) bond, listed on Borsa Istanbul, is YDA İnşaat’s first three-year bond denominated in Turkish lira which is also the longest tenor seen for a local-currency bond issued by a mid-size Turkish infrastructure firm.
 
Proceeds of the bond issue will support YDA İnşaat’s operations under recently awarded public-private-partnership (PPP) projects. The Ankara-based company builds roads, airports, bridges, housing, business centres, hotels, hospitals, school complexes and industrial facilities and is also building its role as a concessionaire for developing and operating infrastructure facilities under PPP arrangements.
 
Speaking at a press conference in Istanbul, Hüseyin Arslan, Chairman of YDA Group, emphasised the strong investor appetite exceeding TL 300 million (€105 million equivalent). Responding to the demand, the company had increased the bond issue to TL 200 million (€70 million equivalent) from the planned TL 150 million (€52 million equivalent).
 
Mr Arslan said: “We highly appreciate the EBRD’s backing of this successful three-year local-currency bond issue. The Bank’s participation helps us diversify our funding sources and secure the necessary longer-term financing for the equity contribution under YDA İnşaat’s key infrastructure projects in Turkey. With the EBRD’s support we will enhance our corporate governance practices – a key area for the company’s succession planning – and will further  improve economic, social and environmental risk management.”
 
Sue Barrett, EBRD Director for Transport, said: “This is the EBRD’s first participation in a local-currency bond by a Turkish company outside the banking sector. With this transaction we are not only supporting an important infrastructure investment company in Turkey but we are also helping to develop local capital markets. We hope that other local corporates – especially in the infrastructure sector – will follow YDA İnşaat’s example and will tap into the local currency bond market to diversify their sources of funding.”
 
Michael Davey, EBRD Director for Turkey, added: “YDA İnşaat is building airports, roads and hospitals where they are needed most. We are pleased to be able to support the company in its commitment to bringing better infrastructure to the people in Turkey.”
 
Improving the quality of infrastructure through greater private sector participation is one of the EBRD’s priorities in Turkey. The Bank started investing in Turkey in 2009 and currently operates from offices in Istanbul, Ankara and Gaziantep. To date, the EBRD has invested almost €4.5 billion in the country in more than 130 projects in infrastructure, energy, agribusiness, industry and finance. In just five years the EBRD’s portfolio in Turkey has become one of the largest among the countries where the Bank invests.