Yapi ve Kredi Bankasi AS canceled a $550 million bond sale that priced last week, the second Turkish bank to back out of a debt issue since the country’s failed coup unnerved investors.
The Istanbul-based bank, owned equally by UniCredit and Koc Holding AS, said it called off the 7-year bond sale because of “negative” market developments and volatility. The bank began taking orders on the bond at $500 million and it priced on July 7.
“The decision not to proceed with the Eurobond deal at this time is not expected to have any adverse impact on our liquidity position, which remains strong and well above regulatory limits,” the lender said in e-mailed statement Tuesday.
Turkey’s lira plunged the most against the dollar in eight years on Friday as tanks rolled through the streets of Ankara and Istanbul, while warplanes and helicopters circled overhead. More than 200 people died in the attempt to oust President Recep Tayyip Erdogan.
On Tuesday, the currency dropped 1.6 percent to 3.0249 per dollar as of 6:47 p.m. in Istanbul, as the government broadened a post-coup purge of the country’s institutions, the central bank cut interest rates and Moody’s Investors Service said it may lower the country’s credit rating to junk.
“This is probably a small deal, but potentially a very big one,” said Paul McNamara, a fund manager at GAM UK. “The base case is they just do the deal again a bit cheaper within next week, but if they can’t, that’s a problem.”
Sekerbank TAS, an Istanbul-based lender owned by its employee pension fund and Kazakhstan’s sovereign wealth fund, postponed investor meetings for a proposed $300 million bond sale after the takeover attempt, according to an e-mailed statement Sunday from bankers with knowledge of the deal.
“I think it is understandable that investors would like to re-evaluate conditions, given the circumstances that arose before the closure of the deal,” Cagdas Dogan, a banking analyst at BGC Partners in Istanbul who has a buy rating on the lender, said by e-mail.
Turkish banks owe $120 billion to institutions abroad, according to Bank of International Settlements data.