REPRESENTATIVE OFFICE ISTANBUL JULY 12, 2005 Terence Singh + 90 212 293 00 32 e-mail: [email protected] ECONOMY & MARKET MARKETS At Monday’s close, market situation was: CBT intervened for the 4th time this year at a O/N for ISE Repo market YTL/USD YTL/USD level of YTL 1.32 and the currency & TLR Interbank market moved to YTL 1.32 thereafter. Reportedly the 14.25% 1.3322 Most actively traded T-Bills intervention amounted to USD 2bn. Date Maturity C/Rate 26/07/05 24/01/07 16.41% Consumer Confidence Index declined to ISE-100 index ISE- 100 Ref $ 99.1 in June from 100.3 in the previous month, 29,273 2.20 hinting in erosion in the consumer confidence. June Primary Surplus was USD 2.2bn, Domestic Debt Stock fell slightly to YTL exceeding the Treasury’s cash primary surplus 234.8bn in June from its end-May level of figure of USD 1.6bn. The cumulative primary 235.9bn. Foreign Debt Stock was almost flat surplus reached USD 14.6bn, i.e. 72% of the during the same period rising to USD 66.1bn year end target. from USD 65.8bn while registering a drop in YTL terms due to the strengthening of the CU rate in June settled below expectations. YTL. The manufacturing sector capacity utilization rate registered at 81.5% in June below the In Brief market expectation of 82.6% and much below the 85.3% level in the same month of last year. Automotive sales: June motor vehicle sales Unemployment rate settled at 10% for April volume was announced to be 65k units. The 05, down for 10.9% for March 05. sale volume is unchanged YoY and is down 10% MoM. On a cumulative basis the sales The following table depicts results of auctions volume is down 15% YoY to 324k in 1H05. held in the last 2 weeks: Issue Mat. Mat. Bid Sales Cov Net Ann. Tourism revenues of USD 1.6bn n June: Date Month NTL NTL % Sales Comp according to SIS data, the number of foreign Yield mn mn NTL mn (%) visitors (based on departures) rose to 21% 12/07/ 28/05/ 35 USD 218 51 803 LIBOR YoY in June reaching 2.2 million. The number 05 08 430m + 1.60 n (FRN) of visiting Turkish citizens living abroad also 19/07/ 19/10/ 3 3,175 2,387 75 2,304 15.16 05 05 increased by 17% YoY. CBT reserves declined slightly by USD 114mn from their historical peak of USD 40bn over the week ending on July 15. POLITIC, DOMESTIC & INTERNATIONAL AFFAIRS Customs Union protocol: the long-awaited articles sent back to the parliament on the signature of the latter, which aims at ground that it was unconstitutional. incorporating the new members of the European Union, has been the object of a lot Turkey’s EU membership application: A of speculation. This is the last requirement to few major European Foreign Ministers Turkey to start accession talks on October 3rd. expressed their support to the Turkish membership. British FM Straw, stressing A veto on the Banking Law was issued by Turkey’s strategic value, said that its President Sezer and it is likely to delay the membership would help stabilise the region. closing of the Unicredito/YKB deal until Straw also stated that the EU borders extended 4Q05. The article on the transfer of the banks to eastern Turkey, implying that Turkey is pension funds to the state was among the three geographically part of the EU. German Fischer 1 REPRESENTATIVE OFFICE ISTANBUL JULY 12, 2005 backed Turkey saying that the cost of rejecting Erdogan met with Russian President Putin Turkey would be significant. Italian FM Fini, and the items in the meeting included the before departing for Turkey, said that Turkey’s extension of the Baku-Ceyhan pipeline to EU membership would benefit the EU. Israel, Russia’s influence over a resolution in A few days later French Interior Minister and Cyprus, developments in Irak, a potential German opposition leader jointly reconfirmed government change in Azerbaijan and some their objection to Turkey’s full membership. measure to be taken to increase trade between the 2 countries. SECTOR NEWS & PRIVATISATION Telsim: SDIF is reportedly preparing to Nura-Limak-Ozaltin, Oyak, Posco, initiate the sale process of the company within Sebverstal and Zorlu Holding. this month. Recall that the company has been • The details of the golden share have under SDIF management since Feb. 2004. been unveiled: reportedly Erdemir’s Among interested parties Etisalat (UAE), buyer needs to employ 95% of the Vodafone (Britain), T-Mobile (Germany), company’s 7,539 employees at YE04 Telenor (Norway), Hutchison (Hong Kong), until the end of 2007. The share also Sabanci Holding (Turkey) and Alfa Group ensures that the capacity of all Erdemir (Russia) are cited. The sale process is expected Group companies do not go below the to be finalized by year-end. current levels and brings an investment requirement of USD 500m. Vakifbank: Reportedly UBS and JP Morgan were mandated for the public offering of Media Assets: Vakifbank while the strategy on restructuring of • The tender announcement for Uzan state banks was presented to Babacan: growth Group’s 21 media assets including the of Ziraat Bank will be haltered while block sale two national TV channels (Star TV and and/or public offering of a portion of Kral TV), one national newspaper (Star) Halkbank stake is envisaged by the end of this and 7 radio stations (MetroFM, JoyFM, year. Ziraat bank is expected to be privatized in RockFM, Kral, SuperFM, Radyo 2007. Alaturka and LokumFM) haz been published. The minimum price and Erdemir: bidding date has been announced as • a consortium of 25 firms has been USD 155mn and 5 September for Star formed for the company’s privatisation TV; USD 45mn and 9 September for under the Union of Chambers and Kral TV. Commodity Exchanges of Turkey’s • Reportedly German RTL Group, Dutch (TOBB) leadership and is composed of SBS Group, law firms on behalf of 2 the following companies/groups: Kibar international companies as well as Ciner Holding, Turkon, Tosyali Holding Group, Dogan Group, Uzelli Group, Atakas-Sahin, Auer, Bayraktarlar Karacan Muzik and Global Holding Holding, Borusan, Cebitas, Cemtas, applied for Star Media Group. Diler, Emek Boru, Fiba Holding, Icdas, Kardemir, Kroman Celik, Kocoglu, Isbank announced that Global Steel Holdings Metal Sac, MNG Holding, Murat without any major excuses, decided to walk Denizcilik, Tezcan Galvaniz, Ugur away from the SPA signed in May 05 regarding Sirketler Grubu, Yardimi Denizcilik and the strategic sale of Isbank’s 54.68% stake in Yildirim Sirketler Grubu. Izmir Demir Celir over a USD 143mn. (USD • The applicants found eligible for the 78mn for 54.68%) privaisation’s block tender sale are: Arcelor, Azolvstal-Metinvest, Corus, Turk Telekom: the Competition board Eregli Consortium, Koc Holding, declared that the sale of TT to Oger Telecom Lebgok-Okkol, Mittal, Novolipetsk, and Etilisalat is acceptable per competition law. At the same token Council of Ministers 2 REPRESENTATIVE OFFICE ISTANBUL JULY 12, 2005 approved the sales yesterday. Prior to the Share Deutsche Bank, Societe Generale, Temasek and Purchase Agreement High Administrative General Electric), Temasek and General Court has to give its opinion on the concession Electric are a step ahead. The total valuation for to be granted in 90 days. Garanti is expected to be around US 6bn. Garanti Bank: Reportedly Garanti’s parent Yapi Krepi: Reportedly the YK and Koc Dogus Group is not willing to lose control in Financial Services (KFS) deal is likely to close the bank in the case of an alliance with a next month or in early September, in line with foreign bank. The same source states that market expectations. among the five potential bidders (ABN Amro, COMPANY NEWS Akbank announced that 25 joint arranger Garanti Bank published its unconsolidated banks were given the mandate for a one-year BRSA results for 1H05 reporting net earnings maturity USD 1,250 syndicated borrowing. of USD 237mn vs USD 142mn in 1H04. This syndication will replace the existing USD 500mn borrowing maturing in early-Aug and Tupras’ refining margin stood at USD will be used for trade financing. Akbank has 6.40/bbl in June 2005, unchanged MoM and another syndicated borrowing (USD 550mn) up 21% YoY. The refining margin averaged maturing in December 2005. USD 6.7/bbl in 2Q05, 40% higher than the Eregli received USD 200mn credit from same period last year and 4% higher than the Akbank with 9 years maturity and 2 years previous all-time high of USD 6.4/bbl. grace period to finance its investments. Sabanci Holding JV Carrefoursa: Koc Holding obtained a 3 year Euro 250mn • realized the acquisition of 50.178% Gima loan bearing a Euribor +1.5% interest rate. shares from Fiba Group, increasing its Migros announced that it plans to receive a shareholding from 10% to 60.178% in line USD 60mn loan from Rabobank maturing in with the sale agreement signed on May 3rd 5 years to finance its expansion plans both in 2005. Turkey and abroad. • announced that it has decided to apply for a call back tender for Gima’s minority Erdemir: shareholders for which it had paid USD • Its fully owned subsidiary Isdemir signed 120mn to acquire a 60% stake from a USD 59.1mn loan agreement with Finansbank’s parent and group companies. Societe Generale. The loan has a 11 year maturity with a 3 year grace period. Erdemir is the guarantor for this loan. • reported USD 181mn of unconsolidated net profit in its 1H05 financials against USD 185mn in 1H04.