The European Bank for Reconstruction and Development is supporting Turkey’s first ever infrastructure bond with a US$79.5 million participation in a US$ 450 million Eurobond, launched by Mersin International Port (MIP), the private operator of the port of Mersin, on the Mediterranean coast in southern Turkey.
The debut bond will be used for refinancing an existing loan facility as well as to fund part of the capital investment programme for the port.
The port of Mersin – the country’s largest multipurpose port by tonnage and import/export container throughput – is operated by a joint venture between Turkish diversified conglomerate, Akfen Holding, and PSA International (formerly Port of Singapore Authority), one of the world’s largest port operators.
With 85 per cent of Turkish international trade being seaborne, developing the Mersin International Port – the gateway of Turkish industry and agriculture to the Middle East – is crucial for Turkey’s economy, and will also support growth in the wider region.
The EBRD’s contribution will support the refinancing, and will enable the port to accept larger vessels and cater for increases in throughput in the longer term, as Turkey’s rapid economic growth continues to generate the need for ever-improving infrastructure.
The bond, which is listed on the Irish Stock Exchange and provisionally rated Investment Grade by both Moody’s (Baa3) and Fitch (BBB-), will have a seven year maturity. Its successful placement on a foreign stock exchange, with a broad global investor base, will demonstrate new ways of financing infrastructure investments in Turkey, and will encourage other infrastructure companies to diversify their sources of funding.
To date EBRD has invested more than half a billion euros in the country’s infrastructure sector, including Eurasia Tunnel and the new domestic terminal at Izmir Airport. Since the beginning of its operations in Turkey in 2009, the EBRD has invested more than €3 billion in the country, both in direct deals and through credit lines. Last year Turkey became the EBRD’s second-largest country of operations, with €1 billion in new investments in 2012 alone.
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