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CASE STUDY: Tofas Drives International Appetite for €200mn ECA-Backed Facility

Tofas Turk Otomobil Fabrikasi A.S. secured a €200mn ECA-back term loan facility against a backdrop of increasing emerging market volatility. The deal was critical for the development of the country’s automotive industry, and helped Tofas Turk finance the development of two new car models.

Mar 9, 2017 // 2:00PM

Deal At A Glance

Deal: Loan

Deal Type: Trade Finance Facility

Borrower: Tofas Turk Otomobil Fabrikasi A.S.

Governing Law: UK Law


Mandated Lead Arrangers: HSBC, ING Diba

Legal Adviser to Borrower: Clifford Chance/Yegin Ciftci

Legal Advisers to MLAs: Allen & Overy, Gedik   & Eraksoy

Size: €200mn

Pricing date: August 2015

Maturity Date: September 2022

Tenor: 7 years

Yield: 6MEURIBOR+240bp

Use of Proceeds: To finance the development of two new car models


Tofas Turk Otomobil Fabrikasi A.S. sought to raise new funds to invest in the production of the new Agea passenger car family of Tofas. This project was very important for the company and for the Turkish automotive industry.

After mandating banks in April 2015, the company successfully secured a competitively priced 7-year €200mn facility with ECA cover provided by Italy’s SACE.

Transaction Breakdown

The 7-year €200mn facility carried a yield of 6MEURIBOR+240bp and was equally participated by HSBC Bank ING-Diba AG.

The transaction was structured as a club deal with export guarantee cover provided by Italian ECA SACE. It carries a tenor of 6.5 years with a 6-month grace period. The loan’s capital and interest rate payments are scheduled to be made every six months to September 2022.

It was strategically significant for the company, and the development of the automotive industry in Turkey. The Agea model is expected to be the backbone of Tofas’ passenger car sales in the coming years, with the company looking to sell up to 1.3 million new passenger vehicles (sedans, hatchbacks and station wagons) by 2023.

Additionally, half of the Agea models produced will be exported to Europe – with Fiat retailing the vehicle under a guaranteed purchase agreement, an element that improved that bankability of the deal and attracted the support of SACE.

The deal was the largest ECA backed transaction for a Turkish corporate in 2015 and was inked against a backdrop of increasing volatility for emerging markets.

Middle East CEE & Turkey CEEMEA

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