Standard Chartered announces EUR 1.24 billion of financing to construct strategic railway infrastructure in Türkiye
on 9 Dec 20219 December 2021, London, UK – Standard Chartered Bank announces the signing of a landmark EUR 1.24 billion green financing for the Ministry of Treasury and Finance of Türkiye to fund the development of a new high-speed railway line. The 200km long railway track being developed by the Ministry of Transport and Infrastructure of Türkiye, acting through the General Directorate of the Infrastructural Investment (AYGM), is part of Türkiye’s strategic vision to improve national transport infrastructure and connect businesses and local communities. The signing ceremony of the financing took place on 8 November 2021.
The railway line will link the cities of Bandirma and Osmaneli in the North West of the country (passing through Bursa and Yenisehir). Bursa is one of Türkiye’s most industrialized cities and is not connected to the country’s railway network. Therefore, this project is crucial for economic integration of the inland industry and of the population of the Osmaneli region with the Ankara – Istanbul high-speed railway line.
Standard Chartered as the Global ECA (Export Credit Agency) Coordinator, Structuring Bank, Green Loan Coordinator and Mandated Lead Arranger for the transaction brought together Eksport Kredit Fonden[1] (EKF, the Danish ECA), Exportkreditnämnden[2] (EKN, the Swedish ECA) and the Swedish Export Credit Corporation[3] (SEK) to deliver an innovative multi-ECA financing structure[4]. This historic transaction marks the first green ECA-supported financing undertaken by the Ministry of Treasury and Finance. The transaction entails 100% financing of AYGM’s commercial contract for the project’s development with Kalyon[5], a market-leading Turkish engineering, procurement, and construction (EPC) contractor.
Through its well-established ECA relationships and by capitalizing on Kalyon’s expertise in structuring procurement, the Bank developed a fit-for-purpose, multi-reinsurance structure to maximise the ECA supported facilities. This helped achieve long-tenor financing at competitive blended pricing levels all within an expedited end-to-end execution timeline of nine months, achieved through close collaboration with Kalyon and the ECAs.
As the Green Loan Coordinator, Standard Chartered supported the Ministry of Treasury and Finance to identify and confirm the project’s eligibility, as a clean transportation project, for green loan financing and to meet the Green Loan Principles[6]. The Bank also structured the financing to meet internationally recognized sustainability standards, including the Equator Principles[7], International Finance Corporation Performance Standards[8] and the Bank’s own Green and Sustainable Product Framework 2021. The project provides clear environmental benefits given the lower greenhouse gas emissions associated with rail transport vis-à-vis road transportation.
Furthermore, the project will help reduce the pressure on a developing road infrastructure, whilst bringing better mobility for workers, and greater employment opportunities, and an increased flow of business, goods and trade. It will also contribute towards the Turkish government’s alignment with the United Nations’ Sustainable Development Goal[9] 9 concerning industry, innovation and infrastructure.
Yoshi Ichikawa, Head of Structured Export Finance for Europe, Standard Chartered Bank, said: “We’re very proud to arrange bespoke green funding for Türkiye’s Ministry of Treasury and Finance, leveraging our strong relationships with EKF, EKN and SEK, to deliver essential railway infrastructure in Türkiye. Türkiye is a key market for Standard Chartered Bank and this transaction is another example of our here for good promise to help the country to thrive and grow.”
Mr. Serhat KÖKSAL, Ph.D., Acting Director General of Foreign Economic Relations, Ministry of Treasury and Finance of Türkiye, said: “’We are very grateful to Danish and Swedish trading partners and appreciate all other parties for their contribution to this important project, which will reduce the distance between Bursa, the fourth largest city of Türkiye, to both Ankara and Istanbul to 2 hours and 15 minutes. With the completion of the project, it is expected to improve Türkiye’s internal railway connectivity and increase the socio-economic value of the region.”
Thomas Hovard, CCO, EKF, said: “EKF is very proud to work with Standard Chartered Bank in structuring this staggering transaction for the Turkish Ministry of Finance. The deal is labeled ‘green’ and includes a very high level of ESG requirements, which support the transitional efforts of the parties involved.”
Frederic Petersson, Senior Underwriter, EKN, said: “EKN is pleased to have supported Standard Chartered on a successful transaction related to the BBYO- project and Kalyon in Türkiye. This deal is a great example of how sourcing Swedish suppliers not only generates benefits related to the usage of high-quality equipment in a Turkish infrastructure project, but also enables competitive financing through the Swedish export credit system.”
Andreas Ericson, Head of International Finance, SEK, said: “EPC projects are strategically important for SEK as it is an effective way of increase export from Sweden and give more companies access to the Swedish export credit system.”
The Bank has financed large-scale projects of this nature in the past, such as the industry award-winning[10] Standard Gauge Railway in Tanzania[11]. This comprised signing a US $1.46 billion of financing to fund its construction with the government of Tanzania.
— ENDS —
For further information please contact:
Claire Newell
Senior Communications Manager, Europe
Standard Chartered Bank
Tel: +44 (0)207 885 8857
Email: Claire.newell@sc.com
Notes to Editor
The EUR 1.24 billion green financing for the Ministry of Treasury and Finance of Türkiye to fund the development of a new railway line comprises:
- An EUR 577 million 100% EKF direct lending long term loan facility
- An EUR 462 million 100% EKN-covered, SEK-funded long-term loan facility; and
- A commercial facility of EUR 200 million.
Standard Chartered
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[4] See Notes to Editor
[5] https://kalyonholding.com/Home
[6] Loan Markets Association: https://www.lma.eu.com/search?search_paths%5B%5D=&query=green+loan+principles&submit=
[7] https://equator-principles.com/
[8] https://www.ifc.org/wps/wcm/connect/Topics_Ext_Content/IFC_External_Corporate_Site/Sustainability-At-IFC/Policies-Standards/Performance-Standards
[9] https://www.un.org/sustainabledevelopment/infrastructure-industrialization/
[10] Global Trade Review Awards 2021: https://www.gtreview.com/magazine/volume-19-issue-2/gtr-best-deals-2021/
[11] https://www.sc.com/en/media/press-release/weve-arranged-us-1-46-billion-of-financing-for-tanzanian-rail-project/