Joining the rush of Turkish banks taking advantage of the emerging market bond rally since the sovereign was hiked to investment grade by Fitch late last year, Ziraat and Vakifbank are seeking new one year loans to refinance debt at reduced rates, unnamed sources claim.

Ziraat, Turkey's biggest state-owned lender, has hired Bank of America to arrange a one-year syndicated loan, according to two sources cited by Bloomeberg. The newswire reports that Vakifbank, the country's third-largest state lender, has hired the same coordinator for the self-arranged loans.

Both banks are offering to pay an interest margin at 60 basis points over benchmark rates for a deal denominated in dollars and euros. The all-in margin with bank fees included, is 100bp. Both loans will be used to refinance existing debt at lower cost, the sources claim.

Vakifbank is looking to rollover $921m of debt with the deal, which includes euros and dollar portions. The new loan will replace a one-year credit pact maturing on April 9 that paid an all-in margin of 145bp above benchmarks, according to data compiled by Bloomberg.

Ankara-based Ziraat is offering lenders six levels of commitment, with the largest amount at $45m or €35m for an initial mandated lead arranger title. Lenders have been asked to reply to the request by March 8, after which the size of the deal will be decided. Vakifbank lenders have to March 27.

The deals on offer are the same as a recent move by Akbank to refinance $1.2bn of loans maturing in March, which was reported on February 11. The bank also offered a two-year deal at 125bp. BoA was also the arranger for Akbank.

Source: bne