News & Analysis

Turkey's $1.24bn Eurasia road crossing closes

Three-and-a-half-years later, financial advisor Unicredit steered a club of 10 institutions to provide $960m of debt for an undersea tunnel and road linking Istanbul’s European and Asian sides. The icing on the cake: an 18-year door-to-door tenor, Turkey’s longest project financing.

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The Turkish public-private partnership (PPP) market has hit another milestone with today’s financial close of the Istanbul Strait Road Crossing Project – a road and undersea tunnel linking the Turkish capital’s European and Asian sides.

The $1.24 billion build-operate-transfer (BOT) contract had been awarded in 2009 to a consortium of Turkish developer Yapi Merkezi and Korean firms SK-E&C, Kukdon, Samwhan and Hanshin. Financial advisor Unicredit then spent the next three-and-a-half-years putting together the financing, which includes $960 million in debt and $278 million in equity.

The debt is coming from a main club of four banks including the European Investment Bank (EIB), the European Bank for Reconstruction and Development, Korean insurer K-Sure, and the Export-Import Bank of Korea (KEXIM). 

Part of the debt being provided by the EIB is guaranteed by Turkish banks GarantiBank, Isbank and Yapi Kredi while K-Sure's loan is covered by SMBC, Mizuho and Standard Chartered.

The $960m debt package also carries the distinction of being Turkey’s longest project financing, with an 18-year door-to-door tenor, supplanting the 15- to 16-year, €250 million debt package that recently helped airports operator TAV reach financial close on a new domestic terminal at Izmir Airport, located in Turkey’s third-largest city.

The Istanbul Strait Road Crossing Project, also known as the Eurasia Tunnel Project, will see the sponsors build a 14.6-kilometre road – including a 5.4-kilometre twin-deck tunnel under the Bosporous – that will help cut travel times between the European and Asian sides of Istanbul to as little as 15 minutes – a 100-minute reduction. 

In addition, the project will also connect the capital’s Ataturk Airport, located on the European side, with the Sabiha Gokcen Airport, on the Asian side, helping to consolidate Istanbul’s position as an international air transport hub.

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.