Akbank most likely needs to refinance its debt. They most likely do not match the tenure of their debt to the tenure of the assets that they book (i.e. the lending that they make.) They make a 20 year construction loan worth $50 million, but raise debt in the amount of $50 million with a tenure of 5 years instead (maybe because they can't do longer term deals, or, they have a sophisticated interest rate risk management eight-ball on the chief risk officer's desk).
Tuesday, July 20, 2010
I really have loyal readers; less than 10 hours after I wrote out my first question of the blogger appreciation day, I got a couple of responses.
First, a reader wrote the following:
Makes sense... Then, another reader sent me a recent note by Goldman Sachs (unfortunately, no link) that more or less makes the same points I am making, concluding that the bond issue won't help margins much.
Now, I know at least that I wasn't missing something grand. And the first reader has given a plausible explanation. But if you have something to add, don't be shy:)