China Eximbank provides $720 million of debt financing for Phase II of the Ankara-Istanbul High Speed Rail Project

On July 17, 2007, China Eximbank and the Government of Turkey signed a $500 million preferential buyer’s credit (PBC) agreement and a $220 million buyer’s credit loan (BCL) agreement for Phase 2 of Ankara-Istanbul High-Speed Rail Project. This was the first time that China Eximbank ever offered a “mixed credit” that blended a preferential buyer‘s credit and a non-preferential (commercial) buyer’s credit for a single project. The weighted average interest rate of the PBC and the BCL was 2.5%; the weighted average maturity of the PBC and the BCL was 20.3333 years; and the weighted average grace period of the PBC and BCL was 4.3333 years. Sinosure provided buyer’s credit insurance. The PBC and BCL entered into force on April 7, 2008. The proceeds from the PBC and the BCL were to be used by the borrower to partially finance a $1.27 billion commercial contract between Turkish State Railways (TCDD) and a Chinese and Turkish consortium of contractors (consisting of China Railway Construction Corporation, China National Machinery Import and Export Corporation, Cengiz Construction and İbrahim Çeçen İçtas Constructionş), which was signed in November 2006. This consortium had previously won an EPC+F bid for the same contract on October 13, 2005. The “Turkish Portion” of the total project cost ($550 million) was financed by European Investment Bank. Phase 2 involved the construction of a 158 km segment from İnönü to Köseköy along the Ankara-Istanbul high-spreed railway. It was implemented in two sections: a 54km segment from İnönü to Vezirhan and a 104 km segment from Vezirhan to Köseköy. The implementing consortium began construction on the 54 km İnönü-Vezirhan segment on September 22, 2008. It began construction of the 104 km Vezirhan-Köseköy segment on October 21, 2008. This project was completed on July 25, 2014. Phases 1 and 3 of the Istanbul to Ankara-Istanbul High-Speed Rail project were undertaken by Spanish and Italian companies. The implementation of all three phases reduced the travel time from Istanbul to Ankara from 10 hours to 3.5 hours.

Additional details

1. This project is also known as the 58 km İnönü-Köseköy Segment of the Ankara-Istanbul High Speed Rail Project The Turkish project title is Ankara–İstanbul yüksek hızlı demiryolu or Eskişehir-İstanbul hızlı tren projesine. The Chinese project title is 安卡拉-伊斯坦布尔高速铁路 or 安卡拉至伊斯坦布尔高铁二期工程 or 土耳其安伊高铁项目. 2. For the time being, AidData has not recorded the PBC and BCL as separate records since the separate borrowing terms of these loans are unknown. AidData relies on the weighted average interest rates, grace periods, and maturities that are recorded in the World Bank's Debtor Reporting System (DRS). See https://www.dropbox.com/s/2sw4f7gluxa52fk/DRS%20Official%20Commitments%20from%20China%20Through%202021.xlsx?dl=0 and https://www.dropbox.com/s/ab8qt4n6jijcbhd/IDS_Average%20interest%20on%20new%20external%20debt%20commitments.xlsx?dl=0 and https://www.dropbox.com/s/949n5rctiue6d7c/IDS_Average_grace_period_and_maturity_on_new_external_debt_commitments.xlsx?dl=0 3. Neither the China Eximbank PBC nor the China Eximbank BCL that supported this project are included in the Chinese Overseas Development Finance Dataset published by Boston University’s Global Development Policy Center in December 2020.

Number of official sources

25

Number of total sources

45