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Clifford Chance and Bezen & Partners Advise on First-Ever Greenfield Infrastructure Project Bond in Turkey

Clifford Chance and Bezen & Partners Advise on First-Ever Greenfield Infrastructure Project Bond in Turkey

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Clifford Chance and the Yegin Ciftci Attorney Partnership have advised HSBC Bank plc in connection with the recent financing of the state-of-the-art Elazig integrated health campus using the first ever greenfield project bond structure in the Turkish PPP market. The sponsors were advised by Willkie Farr & Gallagher and Bezen & Partners.

Financial institutions underwriting the bonds included Proparco, a French development financial institution owned by Agence Francaise de Developpement (AFD); and IFC, underwriting the un-enhanced portion. In addition to the bonds, the EUR 360 million project was also supported by EUR 72 million in equity investments provided by the shareholders of ELZ Saglik Yatirim, the project development company led by Turkish construction company Roonesans Holding. The joint venture also includes French asset manager Meridiam, and Turkish firms SILA Group and SAM. The same investors previously sponsored Turkey's Adana Integrated Health Campus (as reported by CEE Legal Matters on January 7, 2015), Yozgat Education and Research Hospital (as reported on June 22, 2015), and Bursa Integrated Health Campus, 

HSBC Bank plc acted as sole arranger and global coordinator in the bond issuance. According to Yegin Cifti, "this project has been recognized as a landmark project as the first-ever greenfield infrastructure project bond in Turkey, being also the first of a such project to have a 20-year maturity in the country featuring an innovative credit enhancement provided by the European Bank of Reconstruction and Development and the World Bank’s Multilateral Investment Guarantee Agency (MIGA)." In addition, the firm reports, "the bonds were classified as 'green and social' by the environmental, social, and governance rating firm Vigeo EIRIS.

The project was structured to include an unprecedented credit enhancement scheme provided by the EBRD and MIGA, enabling Moody’s to assign the bonds a Baa2 rating, two notches above the current rating of Turkey. The EUR 288 million bond was issued by way of a private placement amongst leading financial institutions, with IFC underwriting the un-enhanced portion. The bond issue also benefits from deferred draw feature, which minimizes the cost of carry by allowing the issuer to draw the funds gradually during construction.

The project involved a DBFM (Design, Build, Finance, and Maintain) contract for a 1038-bed integrated health campus in Elazig, Eastern Anatolia, which will consist of a general hospital, a women's and children's hospital, and a high-security forensic psychiatric hospital, as well as additional support buildings and facilities.

Yegin Ciftci acted as Turkish legal counsel to HSBC Bank plc, with the firm's finance team led by Partner Mete Yegin and including Counsel Gozde Cankaya, Senior Associate Sait Eryilmaz, and Associates Gokce Uzun and Gozde Ozbeden. The Clifford Chance team was co-led by Paris-based Partner Daniel Zerbib and London-based Partner Clare Burgess, and included (in London) Senior Associate Lucy Carr, Associates Kathryn McArdle, Eimear O'Dwyer, and Russell Harris, and  Trainee Solicitors Michael Obiri-Darko and Stephanie Ofili; (in Paris) Counsel Julien Rocherieux; and (in Luxembourg) Partner Steve Jacoby and Senior Associate Markus Waitschies. A separate Clifford Chance team, led by Partner Bruce Kahl, advised the trustee, and teams led by Partners Catherine McCarthy, Emma Folds and Anne Drakeford advised certain investors.