Turkish bank Akbank’s $1 billion bond has avoided the usual loan participation structure and planned ahead for an expected change to tax laws.
“Akbank decided to bite the bullet and try a direct issuance, notwithstanding the witholding tax costs,” said Simon Porter, who led the deal for Akbank’s UK advisers Baker & McKenzie. “The loan participation has become increasingly difficult and expensive since tax regulations changed in Turkey.”
To avoid the withholding tax that Turkish law applies to bonds, transactions in the country have traditionally been structured as loan participations.
But since 2007 when tax rules were...