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Izmir Airport closing signals Turkish PPP take-off

Turkish airports operator TAV has secured €250m in debt from the EBRD, Unicredit, Siemens Bank, Denizbank and the Black Sea Trade and Development Bank. Expect the long-running $1.2bn Eurasia Tunnel Project to also reach financial close this week.

The Turkish public-private partnership (PPP) market is set to enter a period of financial close activity, kick-started by last week’s closing of a TAV-sponsored new domestic terminal at Izmir Airport, located in Turkey’s third-largest city.

Five banks have joined forces to provide a €250 million debt package comprised of long-dated, 15- to 16-year facilities. The package’s principal funder was the European Bank for Reconstruction and Development (EBRD), which provided a 16-year, €145 million loan through its traditional A/B loan structure. The latter sees the EBRD fund the €70 million A-loan directly, with Unicredit and Siemens Bank funding the €75 million B-loan. 

Denizbank (€65 million) and the Black Sea Trade and Development Bank (€40 million) round up the rest of the €250 million debt package through 15-year facilities. The funds will be used to build a new domestic air terminal and extend the airport’s existing international terminal.

The financial close follows last November’s award, by Turkey’s General Directorate of State Airports Authority (DHMI), of the operating rights to Izmir Adnan Menderes Airport’s international and domestic terminals to TAV Airports, the Turkish airports operator, until the end of 2032. 

TAV built the airport, which opened for business in September 2006, under a build-operate-transfer (BOT) model eight months ahead of schedule. It paid €610 million for the rights to operate the terminals last year, pledging to invest €250 million in their development. The airport served more than 7.3 million passengers in the first 10 months of 2011, a 15 percent increase over the same period in 2010, according to DHMI data at the time of the award.

Importantly, the Izmir Airport closing appears to be the start of a period of financial close activity – something the Turkish PPP market has had difficulty in achieving. If all goes according to schedule, this week should also see the financial close of the long-running, $1.2 billion Eurasia Tunnel Project, originally awarded in 2009 to a Turkish-Korean joint venture.

The BOT road contract will require construction of a 14.6-kilometre road – including a 5.4-kilometre twin-deck tunnel under the Bosporus – linking Istanbul’s European and Asian sides. 

About $900 million of debt is set to be provided by the EBRD, the European Investment Bank and Korean export credit agency Korea Trade Insurance Corporation, also known as K-sure. Part of the EIB facility will be guaranteed by local Turkish commercial banks. The debt will have an 18-year tenor.

Early next year, the €940 million Etlik hospital complex, in Ankara, looks set to become the first project in Turkey’s multi-billion euro healthcare programme to reach financial close.

*To find out more about Turkey’s infrastructure plans, be sure to read our special report on the country, published in the December/January edition of Infrastructure Investor magazine.