Tupras has applied to Turkey’s Capital Markets Board and the Energy Market Regulatory Authority for the issuance of bonds or other borrowing instruments to a total amount of US$ 1.0bn (or foreign currency equivalent) with different series and maturities outside of Turkey.
Our view:
Tupras has already raised around US$ 2.1bn from Spain’s ECA, Italy’s ECA and a consortium comprised of 10 international banks. On top of this we calculate Tupras needs a further US$ 1.0bn-1.5bn of additional debt (depending on external refining macro conditions) to finance its Residuum Upgrade Project and maintain its generous dividend policy. Although the timing of the issue is earlier than we had expected, we are positive about the company quickly adapting to the current market conditions. First, there is currently a big appetite on the Eurobond market for emerging market corporate bonds, which is quite rare. Second, the cost of borrowing on the Eurobond market is at, or close to, historical lows. A potential Eurobond issue would also help Tupras to diversify its financial sources and simplify its financial operations.