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Clifford Chance LLP and Yegin Ciftci advise HSBC Bank plc as Sole Arranger and Global Coordinator on the first-ever Greenfield infrastructure project bond in Turkey

16 December 2016

Clifford Chance LLP and Yegin Ciftci advise HSBC Bank plc as Sole Arranger and Global Coordinator on the first-ever Greenfield infrastructure project bond in Turkey

International law firms Clifford Chance LLP and Yegin Ciftci 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.

HSBC Bank plc acted as sole arranger and global coordinator in the bond issuance. This project has been recognised 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 (EBRD) and the World Bank’s Multilateral Investment Guarantee Agency (MIGA). In addition, the bonds were classified as "green and social" by the environmental, social and governance rating firm Vigeo EIRIS.

The project was structured to include a credit enhancement scheme provided by the EBRD and MIGA (the first time such a scheme has been used), enabling Moody’s to assign the bonds a Baa2 rating, two notches above the current rating of Turkey. The EUR288 million bond was issued by way of a private placement amongst leading financial institutions, with IFC underwriting the unenhanced portion. The bond issue also benefits from deferred draw feature, which minimises 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, comprising 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.

This transaction is expected to pave the way for other infrastructure projects to take advantage of the Turkish capital markets as an innovative alternative source of financing rather than relying on traditional funding sources.

Yegin Ciftci acted as Turkish legal counsel to HSBC Bank plc, with the firm's finance team being led by partner Mete Yegin, whilst the Clifford Chance team was co-led by Paris-based partner Daniel Zerbib and London-based partner Clare Burgess, supported by a team of lawyers in London, Paris and Luxembourg. The team at Yegin Ciftci further comprised counsel Gozde Cankaya, senior associate Sait Eryilmaz and associates Gokce Uzun and Gozde Ozbeden. Key members of the Clifford Chance cross-border team included London-based senior associate Lucy Carr and associates Kathryn McArdle, Eimear O'Dwyer, and Russell Harris, with support from trainee solicitors Michael Obiri-Darko and Stephanie Ofili; Paris-based counsel Julien Rocherieux and 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.