VKF_FRAE_2018_uyg11

VakıfBank Annual Report 2018 69 18.7% 11.6% 11.1% Syndicated Loans Eurobond Securitization Post-financing Financing Secured from International Financial Institutions Subordinated Loans Covered Bonds 17.7% 14.8% 14.4% 11.7% Global Medium-Term Note Programme (GMTN) Establishing Turkey’s first ever Global Medium-Term Note Programme (GMTN) in 2013, VakıfBank issued the first ever Euro-denominated Eurobond in Turkey, apart from the Ministry of Treasury and Finance, in 2014. The Bank also issued Turkey’s first Basel III-compliant Tier II subordinated notes in international debt capital markets in 2015 and issued a bond amounting USD 650 million with a maturity of five years on January 30, 2018 under the GMTN Programme. A key aspect of this last transaction is that it was the highest ever issuance in the Bank’s history in a single transaction. Considering that VakıfBank has played a pioneering and innovative role among Turkish banks in this area by issuing long-term bonds in different structures and currencies to address different groups of investors in international capital markets since 2012, This latest issue was yet another demonstration of the strength of the VakıfBank brand, reputation and perception in the eyes of international bond investors. Even as worries concerning Turkish banks mounted, the robust and high-quality demand from over 150 investors from all over the world – especially from US-based portfolio managers with long-term investment horizon – played an important role in the success of the deal. Thanks to strong demand for the deal, the issue volume, which was first set at USD 500 million, was later increased to USD 650 million, and the coupon rate came in at 5.75%, 25 basis points below the initial level. Securitization Loan in Seven Separate Tranches In addition to executing the largest Eurobond issuance and syndicated loan deals in the Bank’s history in 2018, VakıfBank secured USD 380 million in financing, denominated in US dollars and EUR, with a maturity of five years in six separate tranches in May, as part of its diversified payment rights (DPR) programme based on foreign cash transfer flows with which VakıfBank provides long-term and cost-effective funding since 2001. Following successful completion of this transaction, a USD 300 million securitization deal with a maturity of 10 years was carried out in October. Thus, even as concerns about emerging markets grew and portfolio inflows lost momentum, the total amount of long- term and cost-effective issuances in the Bank has reached USD 680 million, including the transactions in May, under its securitization programme based on transfer flows. The transactions were entitled an investment grade “BBB-” by the credit rating agency Fitch. Since 2001, the total funding under the programme reached amount of USD 5.3 billion. As of December 31, 2018, the Bank’s total securitization loan balance is USD 1,491 million and EUR 319 million. In 2018, VakıfBank continued to issue covered bonds and became the most active Turkish bank in this area with five issues under the Covered Bond Programme.