Bosphorus (Eurasia) Tunnel

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In December 2012, Avrasya Tuneli Isletme Ve Yatirim AS, an SPV, secured financing for a 14.5km road and tunnel under the Bosphorus Strait, connecting Europe and Asia to be developed under a build-own-transfer basis for 30 years. The SPV was owned by a consortium of Turkish and South Korean sponsors comprising of Yapi Merkezi, SKEC, Samwhan, Fudong Engineering & Construction, hanshin Construction and Namkwang Engineering & Construction. The consortium won the tender for the project over a French-Turksih consortium formed between Cengiz Inssat Makyol Dogus Inssat and Vinci in December 2008. Financing amounted to US$1.238 billion. Senior loans on the deal amounted to US$960 milion (77.6%), and equity on the deal was US$278 million(22.4%) with standby equity of US$7 5million (6.1%). The EIB, the EBRD and Kexim/K Sure were involved, with US$150 million from the EBRD, a US$150 million direct loan and a US$200 million guaranteed loan from the EIB, a US$300 million loan from Kexim and a US$171 million guaranteed loan from K Sure. The EIB guaranteed facility of US$200m was split equally amongst three Turkish banks - Garanti, Isbank and Yapi Kredi. The guarantee coverage was 110% of the underlying facility, such that in practice the three banks are lending US$220m. The Ministry of Transportation’s Infrastructure Investments Directorate (AYGM) provided a revenue guarantee of 25m crossings. 30% of the excess revenue was to be paid to AYGM. Commercial debt was provided by SMBC US75million, Standard Chartered US$75 million, Mizuho US$60 million. Pricing for ECA facilities was 220bp and for commercial facilities 350bp with a loan term of 18 years. The credit spread on the swap was 42bp. The financing included the first Debt Assumption Agreement with the Turkish Treasury, which seeks to partially mitigate against FX risk due to US$ denominated debt lent against toll revenues generated in Turkish Lira.