The falling risk premium, rising credit ratings and the positive impact of anti-inflation policies on reserves and the current account deficit have led to record-breaking bond issues abroad by the public sector, banks and the private sector. The issuances made until the end of July this year reached a historical high of USD 20.9 billion.
The Treasury, banks and institutions issued a total of USD 20.9 billion worth of international bonds this year. While this marks the highest level of issuance in history, the Treasury’s expected issuance in the fall as well as the issuance permission ceilings obtained from the Capital Markets Board indicate that the year-end will close with a higher record.
Changing monetary and fiscal policies in Turkey following last year’s general elections paved the way for both the Treasury and the private sector to borrow abroad. While the optimistic outlook for the Turkish economy, credit rating upgrades and Turkey’s falling risk premium had a positive impact on foreign borrowing costs, high domestic interest rates also encouraged the private sector to look abroad. Since the beginning of this year, foreign bond issuances have increased from all corners, while market experts believe that as long as the positive effects of economic policies on inflation, current account balance and foreign exchange reserves continue, foreign borrowing conditions will remain attractive in the coming period thanks to credit rating increases and the decline in the CDS premium.
Ziraat Bank opened the bond issuances with a 500 million dollar issuance with a maturity of 5 years. The issuance, which yielded 8.130 percent to investors, was followed by Yapı Kredi’s 10-year bond issuance of 650 million dollars. The return to investors in this issue was 9.25 percent. While TEB closed its 10-year maturity 400 million dollar issuance with a yield of 9.380 percent, Türk Eximbank made the last issuance of January with a 4-year maturity 500 million dollar issuance. The return to investors in this issue was 7.750 percent. In February, the Turkey Wealth Fund provided 8.375 percent return to investors with a 5-year maturity of 500 million dollars, while the first non-bank private sector issuance was WE Soda’s 7-year maturity 500 million dollar bond issuance. The return of this issuance to investors was determined as 9.375 percent. The Treasury borrowed abroad in February and realized a borrowing of 3 billion dollars with a 10-year maturity. The return to investors in this issue was 7.875 percent. Garanti, on the other hand, issued 500 million dollars with a 10-year maturity in February, and the return to investors was calculated as 9.375 percent.
Will continue to be attractive to foreigners
In July, Ülker gave 7.875 percent return to investors in its 7-year maturity 550 million dollar issuance The Treasury was on the stage again in July. In the Treasury’s dollar-denominated issuance with a maturity of 8 years, 1 billion 750 million dollars was borrowed. The return to investors in the issuance was 7.3 percent. Erdemir borrowed 750 million dollars and 200 million dollars with two 5-year maturities. The return to investors was 8.625 percent in the first auction and 8.125 percent in the second issue. In Limak Cement’s 5-year maturity issuance of 575 million dollars, the return to the investor was calculated as 9.750 percent. According to the information provided by the banking sector sources, Turkish bonds are still very attractive to investors and stated that as long as the real appreciation policy continues, everyone will continue to prefer borrowing in foreign currency instead of borrowing TL. Although the increase in these issuances increases dollarization, experts believe that it is too early to talk about a risk here. Stating that the increase in FX-denominated borrowing is not at a level that would pose a risk, especially if it is long-term, market experts expect the issuances to continue.
