Investment promotes longer tenor of local-currency bonds issued by Turkish firms
In a new TL 70 million (€15 million equivalent) capital markets transaction in Turkey, the EBRD is supporting the debut bond issuance by Zorlu Osmangazi Enerji Sanayi ve Ticaret A.S., a subsidiary of Zorlu Enerji and part of the Turkish conglomerate Zorlu Holding.
Zorlu Osmangazi carries out electricity distribution and sales services in five Turkish provinces: Eskişehir, Kütahya, Afyon, Uşak, Bilecik which together make up the Osmangazi region of Turkey.
Through its subsidiaries Osmangazi Elektrik Dagitim A.S. (OEDAS) and Osmangazi Elektrik Perakende Satis A.S. (OEPSAS), the company serves more than 2.5 million people.
Zorlu Osmangazi is tapping capital markets to partly finance its four-year investment programme which includes replacement, upgrade and expansion of its network to meet growing demand in a key industrial region.
The EBRD has invested in the three-year TL 140 million tranche of the bond which uses TRLIBOR, the Turkish Lira Interbank Offered Rate, as its benchmark rate. The total amount issued by the company, including the shorter-tenor 1.5-year tranche, was TL 175 million.
The bonds will be listed on Borsa Istanbul, Turkey’s sole stock exchange.
The transaction is part of the EBRD’s efforts to promote corporate bonds denominated in Turkish lira as financial instruments for companies whose costs and revenues are in local currency. These help them avoid foreign exchange risk as they raise finance.
Arvid Tuerkner, EBRD Managing Director for Turkey, said: “At the EBRD we are a strong advocate of local-currency corporate bonds with longer tenors and greater transparency. We are pleased that our backing helps Turkish corporates, such as Zorlu Enerji, attract a wider pool of international investors as they access capital markets for much-needed finance.”
Harry Boyd-Carpenter, EBRD Director for Power and Energy, added: “Strengthening and expanding access to energy is critical to support Turkey’s growing economy. Zorlu Enerji is a long established partner of the Bank and we are delighted to have the opportunity to support such a strong and experienced company in this key area.”
The cooperation between the EBRD and Zorlu Holding dates back to 2009 when the EBRD started investing in Turkey. In its first project in the country, the Bank financed the construction of Rotor wind farm in Osmaniye, in southern Turkey, developed by one of Zorlu Holding’s companies. The Bank has also provided financing for the Kizildere geothermal power plant in the south west of the country, and has supported research and development at Vestel Electronics, also a member of the conglomerate.
Founded in 1953 and based in Istanbul, Zorlu Holding is engaged in the businesses of textiles, consumer electronics, white goods, information technology, energy, property, mining and metallurgy.
The EBRD is a major investor in Turkey. To date, the Bank has invested over €9.5 billion in various sectors of Turkey’s economy, with almost all investments in the private sector. In 2017, the Bank signed more than 30 projects worth more than €1 billion and expects to exceed €1.5 billion in investments this year.