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Legal Alerts

CMB Tightens Turkish Debt Issuers’ Belt While Introducing Facilities for Cross-Border Issuances

Legal Alerts
Capital Markets

Recent Development

The Capital Markets Board of Turkey (the “CMB”) amended the Debt Instruments Communiqué (the “Communiqué”). The new amendments are effective as of February 18, 2017.

What are the amendments?

Under the Communiqué, new rules will apply to the domestic and cross-border issuance of debt instruments:

  • If the upper limit of a multiple issuance program is denominated in TRY or another foreign currency for cross-border offering, the exchange rates for separate issuances within the program will be recalculated based on the Turkish Central Bank exchange rate shown just one day prior to each tranche issuance, in case the debt instruments are intended to be sold in a currency other than the denominated currency of the issuance program. Previously, the exchange rate for an offering program was fixed for the entire program.
  • The CMB, if it deems necessary, may shorten the validity period of the issuance certificate at its sole discretion.
  • In the event that the issuer applies for a new issuance limit within the term of the previously approved limit, if the issuer so requests, the previous unsold debt instruments may be cancelled partially or wholly upon the approval of the CMB.
  • After obtaining the CMB-approved issuance certificate, issuers will be able to offer cross-border debt instruments by simply applying to the CMB through an electronic application platform for each tranche issuance covered by the CMB issuance certificate. The names, surnames, Turkish identity numbers and contact information of the persons making tranche issuance applications via secure electronic signature will be sent to the CMB. The requirement to obtain a physical CMB approved tranche issuance certificate for each cross-border debt instrument issuance within an issuance program was abolished.
  • Issuers will no longer be required to register their cross-border debt instrument issuances with the Central Registry Agency (the “CRA“). They are only required to notify the CRA regarding the amount, issue date, ISIN, first payment date, maturity date, interest rate, name of the custodian, currency of the bonds, the country of issuance and any change to the above information, if any, including an early redemption within three business days from the date of issuance or, in the case of any change to this information, the relevant change.
  • Financial leasing companies, factoring companies, finance companies and other financial institutions will no longer benefit from the issuance limit increase, which is 100% of the issuance limit, after December 31, 2017. However, capital markets institutions may benefit from this advantage until December 31, 2017.
  • Banks and financial institutions will no longer benefit from the additional issuance limit facility for cross-border issuances, which was 50% of the issuance limit.
  • Issuance limits will not apply to the debt instruments issued abroad for the purpose of project financing or refinancing of the healthcare public private partnership (PPP) projects in Turkey.
  • The CMB fee decreased from 2‰ to 1.5‰ for debt instruments with maturities longer than 730 days. In addition, capital markets institutions will no longer enjoy the discounted CMB fee.
  • Issuers will be able to change the terms and conditions of the bonds to be issued in Turkey for investors granting written approval for such changes.
  • All issuers will be able to buy back and sell their debt instruments on the secondary market, which was previously limited to banks. The issuer’s website must disclose buy-back and sale prices. Additionally, issuers are entitled to cancel these debt instruments before maturity.
  • Information regarding the early redemption of bonds or recalculation rates for exchangeable bonds will no longer be disclosed on the Public Disclosure Platform.
  • The Communiqué’s reference changed from II-31.1 to VII-128.7.


The Turkish domestic bonds market saw several defaults in 2016. By introducing these amendments, the CMB is attempting to mitigate any potential defaults and relaxing the procedural requirements for cross-border issuances.