Swedish export credit agency EKN and the Islamic Development Bank’s credit insurance arm are backing €1.5bn in financing for the construction of a tunnel in southern Turkey.
The loan is being provided to Turkey’s ministry of finance and will be used to build the 25-kilometre Hassa-Dörtyol railway and highway tunnel, connecting the regions on either side of the Nur Mountains, a route that currently requires a significant detour.
Société Générale is a mandated lead arranger and the sole co-ordinator and facility agent, while KfW-Ipex Bank also acts as mandated lead arranger.
The financing is comprised of two facilities, the first of which is an EKN-covered €1.12bn facility provided by Deutsche Bank, HSBC, ING, KfW-Ipex Bank, Santander and Société Générale, according to a source familiar with the deal. The facility has a tenor of 21 years.
The second €420mn loan is covered by insurance from the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), and is provided by the same banks as well as Yapi Kredi and Vakifbank, the source says. The facility has a tenor of 10 years.
Two Turkish contractors, Doğuş İnşaat and Met-Gün/Eze İnşaat, are building the tunnel, Société Générale says in a LinkedIn post.
The tunnel will allow for faster journeys between industrial areas in southeastern Anatolia and the Mediterranean port of Iskenderun, KfW-Ipex Bank says in a statement.
The German lender says it is contributing €200mn to the financing, which it adds will help the Hatay region recover from a 2023 earthquake which killed over 55,000 people.
“With this transaction, we not only underline our expertise in financing sustainable railway infrastructure projects as well as in export finance but also support efforts to increase the region’s resilience to major seismic events”, says Aida Welker, a member of KfW Ipex-Bank’s management board.
Spokespeople for KfW-Ipex, ICIEC and EKN either declined to answer further questions about the deal, or did not respond.
Turkey is a consistent recipient of financing backed by export credit agencies, including previous deals for wind farms, the construction of high-speed railways, and the importation of trains.
