Istanbul may sell at least $500 million of bonds to fund six metropolitan projects, in what would be Turkey’s first municipal debt issuance in 27 years, reported Bloomberg.
The city may still decide to use other means of borrowing such as long-term export credit agency loans to complete the projects.
The mayor of Turkey’s biggest city, Ekrem Imamoglu, is in London this week to meet international lenders and investors.
Imamoglu took office in June 2019 is having to contend with unconsolidated debt that has more than tripled since 2014. Should the city council back the plan, it would still need to be approved by the Treasury and Finance Ministry.
Municipal bond sales are rare in Turkey. Ankara sold five bonds between 1990 and 1992 that were denominated in German marks and Japanese yen. Istanbul’s attempt to sell $200 million of bonds in 2001 was scrapped when the country plunged into its worst-ever financial crisis.
Turkey’s biggest city tried to borrow EUR 925 million ($1 billion) from international markets in 2017 to finance the six metro projects under construction at the time. It now has 16 developments either under construction or planned.
The city budgeted to spend TRL 6.5 billion ($1.1 billion) for these projects in 2019 as part of an ultimate aim to expand its rail network to 1,100 km from 233 km for its 16 million people.
The city has a B1 rating from Moody’s, which is four notches below investment grade with a negative outlook. Fitch Ratings has the municipality at BB-, also with a negative outlook, three steps into junk and in line with Turkey’s sovereign rating.