Your Capital Markets Team in Turkey summarized the international bond offering requirements in Turkey as well as issuances approved by the Capital Markets Board during May 2022.
International Bond Offering Requirements for Turkish Issuers
Legislation
The Capital Markets Law No. 6362, the Communiqué on Debt Securities (VII 128.8) and the Communiqué on Prospectus and Issue Documents (II 5.1) issued by the Turkish Capital Markets Board (the "CMB") introduces the legal framework for international bond issues by Turkish issuers and provides limits on issue size, approval and registration requirements.
Corporate Authority
The General Meeting of shareholders must approve each bond issue unless the power to do so has previously been granted to the Board of Directors, either in the Articles of Association or by a decision of the General Meeting of shareholders, for a maximum period of 15 months.
Regulatory Approval
Issuers must obtain CMB approval prior to each new issue of bonds. CMB approval is granted up to the maximum amount of bonds (issue ceiling) that can be issued for the period of one year. In order to obtain CMB approval, issuers must submit an issuance certificate, which is a brief document that contains information relating to the qualification of bonds and terms of sale, and a tranche issuance document pertaining to the partial sale of bonds in different times within the scope of the issuance document.
Financial institution issuers must also obtain the approval of the Turkish Banking Regulatory and Supervision Agency.
Issue Ceiling
CMB grants approval up to a maximum specified principal amount. The issue ceiling is five times an issuer's equity for public companies, and three times an issuer's equity for private companies. Equity must be determined by reference to the latest audited annual financial statements or semiannual financial statements, depending on the application date. There is no issue ceiling for mortgage financing institutions.
CMB Approval Timescale
1 - 2 months (for a repeat issuer the approval timing can be less than a month and for a first time issuer can be around two months).
Prospectus and Registration Requirement
From a Turkish law perspective, Turkish issuers are not required to produce a prospectus for bonds offered exclusively outside of Turkey.
Information relating to bonds (such as issue amount, ISIN codes, maturity dates and interest rates) must be filed with the Central Registry Agency within three business days following the issue date.
Withholding Tax
Withholding tax rates in respect of interest payments vary depending on the maturity of the bonds. Withholding tax on issues with a term of less than one year is 7% and is 3% for issues with a term of 1 to 3 years. There is no withholding tax on issues with a term of 3 years or more.
ISSUANCES APRROVED BY THE CAPITAL MARKETS BOARD OF TURKEY - MAY 2022
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INITIAL PUBLIC OFFERINGS |
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COMPANY NAME |
TYPE OF SALE |
SIZE OF ISSUANCE |
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Europen Endüstri Insaat Sanayi ve Ticaret A.S. |
Offering Through Issuance of New Shares |
TRY 33,780,000 |
|
Seker Gayrimenkul Yatirim Ortakligi A.S. |
Offering Through Issuance of New Shares |
TRY 203,388,821 |
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SHARE ISSUANCES of PUBLIC COMPANIES |
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COMPANY NAME |
TYPE OF SALE |
SIZE OF ISSUANCE |
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Enka Insaat ve Sanayi A.S. |
Issuance Through Dividend |
TRY 400,000,000 |
|
Hateks Hatay Tekstil Isletmeleri A.S. |
Issuance Through Internal Resources |
TRY 42,000,000 |
|
Döktas Dökümcülük Ticaret ve Sanayi A.S. |
Public Offering Through Issuance of New Shares |
TRY 46,000,000 |
|
Halk Gayrimenkul Yatirim Ortakligi A.S. |
Issuance Through Dividend |
TRY 40,000,000 |
|
Gedik Yatirim Menkul Degerler A.S. |
Issuance Through Dividend |
TRY 75,600,000 |
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DEBT INSTRUMENTS ISSUANCES |
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COMPANY NAME |
TYPE OF SALE |
ISSUANCE LIMIT |
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Fibabanka A.S. |
Private Placement / Qualified Investor |
TRY 2,000,000,000 |
|
Garanti Faktoring A.S. |
Qualified Investor |
TRY 1,390,000,000 |
|
Eregli Tekstil Turizm Sanayi ve Ticaret A.S. |
Qualified Investor |
TRY 1,050,000,000 |
|
Korteks Mensucat Sanayi ve Ticaret A.S. |
Qualified Investor |
TRY 1,000,000,000 |
|
Sarten Ambalaj Sanayi ve Ticaret A.S. |
Qualified Investor |
TRY 50,000,000 |
|
BÇ Grup Tarim Isletmeleri A.S. |
Private Placement |
TRY 25,000,000 |
|
Koç Fiat Kredi Finansman A.S. |
Private Placement / Qualified Investor |
TRY 350,000,000 |
|
PhillipCapital Menkul Degerler A.S. |
Private Placement / Qualified Investor |
TRY 580,000,000 |
|
Sümer Faktoring A.S. |
Qualified Investor |
TRY 113,000,000 |
|
Info Yatirim Menkul Degerler A.S. |
Qualified Investor |
TRY 500,000,000 |
|
Deniz Faktoring A.S. |
Qualified Investor |
TRY 556,000,000 |
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.