MUFG and export credit agencies unlock €1.2bn financing for Turkish electric railway
The financing package comprises a €1.027bn loan guaranteed by ECAs and a separate €220m commercial loan facility supported in part by the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC). MUFG was appointed the sole mandated lead arranger, coordinator, structurer and agent bank by the Turkish Ministry of Treasury and Finance.
UKEF guaranteed the ECA facility, with Italian (SACE), Polish (KUKE) and Austrian (OeKB) counterparts providing significant reinsurance. ICIEC provided insurance to several of the commercial lenders.
UKEF is an export credit agency operating at no net cost to the UK taxpayer. Its involvement secures substantial opportunities for UK firms, which are expected to supply steel, pipes and other equipment.
The financing allows Turkey’s Ministry of Transport and Infrastructure – acting through the General Directorate of Infrastructural Investment (AYGM) – to develop 140km of low-carbon electric railway between Yerköy and Kayseri.
The new railway line will help the country to expand its low-carbon rail network, reduce road congestion and cut net emissions on the Yerköy-Kayseri route by over 6,500 tonnes of CO2e per year. Connecting to the Ankara-Sivas line which opened in April 2023, the new route is also expected to support regional economic growth by increasing regional passenger and freight rail capacity around Turkey’s capital region.
The announcement comes as UK Secretary of State for Business and Trade Kemi Badenoch visits Turkey to strengthen business links.
Kemi Badenoch, UK business and trade secretary, said: “I’m delighted to be in Turkey ahead of talks to upgrade our existing trade deal to make it fit for the 21st century.
“With its major economy and strategic position, Turkey presents huge opportunities for UK businesses. And I’m excited to start discussions on ensuring our new trading relationship with Turkey unlocks those opportunities.”
The project will be delivered by a joint venture between Turkish contractors Doğuş İnşaat, Çelikler and Özkar. Doğuş, Çelikler and Özkar were also main contractors for the newly opened Ankara-Sivas High Speed Railway.
This is the third high-speed railway project which UKEF, SACE and OeKB have jointly backed in Turkey, with their support now helping to lay more than 900km of track for a more sustainable rail network.
Christopher Marks, managing director, head of portfolio solutions, Innovative Finance & Growth Markets for EMEA, MUFG, said: “This transaction demonstrates MUFG’s long-term commitment to Türkiye. We are proud to have worked with the Republic of Türkiye on this landmark financing. We continue to work with public sector and sponsor clients to deliver such innovative financing solutions that propel their transition plans for a more sustainable future. We are pleased to have successfully delivered a blended finance solution, with ongoing support from the ECAs and ICIEC, that aligns the financing to the Green Use of Proceeds criteria set by the Republic of Türkiye’s Sustainable Finance Framework.”
Mr. Oussama Kaissi, chief executive officer, ICIEC, said: “ICIEC is proud to have played an instrumental role in this impactful transaction, confirming our unwavering commitment to supporting critical infrastructure developments in Türkiye and within ICIEC Member States. The Yerköy-Kayseri rail line attests to Türkiye’s visionary approach to a sustainable transport system as well as strategic initiative in the face of global climate challenges. Collaborating with esteemed partners like MUFG and UK Export Finance to champion this project aligns with our dedication to environmental, social, and governance principles to foster economic growth and sustainable development.”
Tolga Akkaş, chairman of the Board from Doguş Çelikler Özkar JV, added: “We are honoured to be entrusted as the main contractor for the Yerköy-Kayseri High-Speed Railway project, advancing the sustainable rail infrastructure in Türkiye. As one of the contractors for the Ankara-Sivas High-Speed Railway project, inaugurated in April 2023, we are eager to bring our expertise to the Yerköy-Kayseri route. The adoption of high-speed rail technology inherently leads to a more energy-efficient and eco-friendly mode of transportation compared to traditional alternatives. This project features not only a significant stride in Türkiye’s railway network but also connecting communities, driving economic prosperity, and fostering sustainable development.”
“This impactful transaction is made possible through the collaborative efforts of esteemed partners such as UK Export Finance and MUFG. We express our sincere gratitude for their unwavering commitment to supporting initiatives that contribute to the sustainable development of countries.”
Marcus Dolman, vice president of the British Exporters Association (BExA), noted: “This deal demonstrates continued support for the development of the Turkish rail network. The UKEF guarantee offers a huge boost to UK exporters looking to increase, or start, their export portfolio under a secure umbrella. Deals of this type are essential to increase the UK supply chains of large overseas contractors. BExA congratulates UKEF on this transaction and their continued support for UK exports.”
