Soon after the now leading Turkish telecommunication company was established in 1994, the Swedish Export Credit Agency guaranteed the first of several Swedish export credits to the company. However, during the last ten years, the two organisations have remained in close dialogue but not worked together.
That changed earlier this year when EKN issued an export credit guarantee for a 150 million US dollar loan with a ten-year tenor, for Turkcell’s purchases of mobile and fixed telecom equipment and services from Ericsson.
“We are very happy that Turkcell, with a very good credit rating, has returned to EKN to diversify its loan portfolio,” says Katarina Hirsch, Senior Underwriter in EKN’s Infrastructure and Telecoms team. “But while they have a strong financial position, they are acting in a turbulent environment that saw the weakening of the Turkish Lira last year and many banks pulling out of the country.”
It was against this turbulent environment that Ericsson, a key EKN customer, contacted EKN to support its contract with Turkcell. An EKN team provided an attractive indicative premium and went to Istanbul in November 2018 to undertake a due diligence process.
The deal was signed in February 2019, with JPMorgan Chase Bank N.A. (J.P. Morgan) and the Swedish Export Credit Corporation (SEK) as joint arrangers with funding at a state-supported interest rate. J.P. Morgan has a strong presence in Turkey and is performing the role of agent for the transaction.
“We are delighted with being involved in this important financing for one of Turkey’s biggest mobile operators,” says Ayotunde Lemo from J.P. Morgan’s EMEA Export Finance team. “This financing shows how J.P. Morgan can support its clients, aided by the excellent collaboration within the Swedish export credit system to finance Swedish exports globally. The transaction was executed within a tight deadline and is testament to the strong working relationship we have with EKN and SEK.”
The speed with which the transaction was completed and the fact it brings Turkcell and EKN back into business together are both sources of pride for Hirsch.
“What is very special about this transaction is that it was a very fast process from when we started our due diligence in November until it was signed at the end of February,” she says. “Everything went very smoothly, and everyone was very focused. We had very good cooperation with all the parties involved. I am also very happy that a customer that we have been working with for a long time but has not been tapping the Export Credit Agency market, at least not with EKN for the last ten years, is coming back.”
Hirsch adds that Turkcell is a very important customer for Ericsson, a major Swedish exporting company that EKN works closely with. “It makes it easier for Ericsson to sell to Turkcell when they can offer financing,” she says. “A competitive advantage in addition to their commercial offering if they can provide attractive financial solutions.”
By assuming the risk for this financing, EKN is providing stability for the transaction and, as Hirsh says, it is making its customers very happy.
“Our mission is to support Swedish exports,” she says. “And this is a very good example of this. We work with our customers both in upturns and downturns and here we have supported them with very attractive financing. We can add further stability in making sure that Turkcell continues to get financing and funding providing Ericsson with a continued competitive advantage in a very tough competitive field. This is where we add value.”