Turkey's Yapi cancels $550 million 4½% notes, not expected to impact liquidity

By Paul A. Harris

Portland, Ore., July 19 – Turkey’s Yapi ve Kredi Bankasi AS canceled $550 million of 4½% notes due July 19, 2023 on Tuesday, the day the notes were to settle, according to a market source.

Turkish debt widened substantial since the deal was priced on July 12, owing to the attempted coup and the uncertainty of Turkey's standing with the European Union, in light of political developments and in light of an announcement from Moody's Investors Service on Monday that Turkey's Baa3 long-term issuer, senior unsecured bond ratings and provisional Baa3 senior unsecured shelf rating are on review for downgrade because of events surrounding the coup and their possible economic fallouts, the source said.

The source added that the deal was an opportunistic pass at the market and that Yapi Kredi's liquidity should not come under threat because of the cancellation of the bond deal.

The notes were priced at 99.26 to yield 4 5/8%, or mid-swaps plus 342.6 basis points, at the tight end of yield talk in the 4¾% area.

BofA Merrill Lynch, Deutsche Bank, HSBC, ING and UniCredit were the bookrunners.

Yapi Kredi is an Istanbul-based lender.

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