Turkey: time to worry

Turkey’s debt markets always seem resilient to political shocks. But rose tinted views of president Recep Erdogan’s referendum victory this week ignore a worrying truth that its vast growth potential lies more than ever in the hands of one man able to squander it.

  • By Virginia Furness
  • 20 Apr 2017
Email a colleague
Request a PDF

Turkish assets rallied after the result and Isbank went to sell a new bond on Thursday.

The yields may be enticing but Turkey bulls pin their hopes on a belief that now the “political noise is over” Erdogan will turn to improving the economy.

Fitch said his victory may facilitate a revival of “credit-positive reforms”. Indeed, deputy prime minister Mehmet Simsek, a market favourite, suggested accelerating reforms starting in May.  

But if Erdogan’s victory speech is anything to go by his slim win served only to embolden his confrontational, despotic approach to government. Sticking two fingers up at the EU, he talked of a reintroducing the death penalty, which would render Turkey’s accession to the Union for lack of a better word, dead. The political noise is most certainly not over. 

The executive powers he gained in the referendum will weaken checks and balances on his government, including on its economic policy, leaving Turkey’s outlook even more dependent on his whims.

In addition, questions over the legality of the referendum should matter to the country’s long term investors. If the rule of law tumbles, said analysts, so will foreign direct investment.

Turkey’s economy grew at 2.9% in 2016. This was underperformance. While the sovereign may have a perfect history of servicing its debt, investors must look beyond the short term. The future looks bleak. 

  • By Virginia Furness
  • 20 Apr 2017

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 13 Mar 2017
1 JPMorgan 94,925.33 384 8.39%
2 Citi 87,531.58 331 7.74%
3 Bank of America Merrill Lynch 84,341.49 288 7.46%
4 Barclays 75,288.19 241 6.66%
5 Goldman Sachs 68,504.71 208 6.06%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 16 May 2017
1 Deutsche Bank 19,381.65 47 8.82%
2 Bank of America Merrill Lynch 18,968.25 36 8.63%
3 HSBC 18,103.95 50 8.24%
4 BNP Paribas 8,911.57 55 4.05%
5 SG Corporate & Investment Banking 8,885.00 54 4.04%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 23 May 2017
1 JPMorgan 8,714.26 35 8.36%
2 UBS 8,283.47 33 7.95%
3 Goldman Sachs 7,736.57 37 7.42%
4 Citi 6,897.11 46 6.62%
5 Bank of America Merrill Lynch 6,215.31 24 5.96%