Turkey

Turkey has re-entered the debt capital markets with the intention of selling a Sharia-compliant bond, a sukuk. The proposed deal, which some say could come at a premium, was announced just days after Saudi Aramco achieved an enormous order book on its debut sukuk.

Turkey’s credit metrics took another hit this week after contradictory statements on interest rates from president Recep Tayyip Erdoğan and central bank governor Şahap Kavcıoğlu. Market participants said the environment for foreign investors is rocky, and any new sovereign Eurobond would have to offer a "big premium".

Yapi Kredi Bank and Garanti Bank this week became the latest Turkish banks to refinance syndicated loans, in the process raising ESG-linked facilities. The trend towards ESG-linked financing is not driven by the desire to cut costs, which for many has been only symbolic, but by a desire to help boost borrowers’ credentials and to make life easier for international lenders.

Arçelik, the Turkish household appliance manufacturer that owns Beko and Grundig, is set to make its mark in the green bond market. The deal, some say, will be a test of investor appetite for Turkish corporate paper, which so far has been strong, despite the heightened volatility affecting the country in the first four months of the year.

Turkish companies and banks are succeeding in raising funds in international debt markets, even as the country strays near the edge of an economic precipice and experienced investors view Turkish risk with disdain.

Emerging market portfolio managers say that their confidence in buying assets has been restored now that US Treasury yields have stopped racing upwards. But although they say they have cash to splash, some still believe valuations are toppy.

LimakPort, the Turkish international port, entered the debt market on Tuesday, while Turk Eximbank has successfully secured a dollar syndicated loan facility. Turkish issuers are demonstrating resilience, market participants say, amid the heightened levels of domestic and political volatility in the last three months.

The new governor of Turkey’s central bank, Şahap Kavcıoğlu, kept rates unchanged at his second monetary policy meeting since taking office. Although a rate cut was unlikely, the decision bodes well for next week’s planned dollar bond issue by LimakPort.

The new Turkish central bank governor Sahap Kavcioglu kept rates unchanged at his second monetary policy meeting since taking office. Although a rate cut was unlikely, the decision bodes well for Turkish port operator LimakPort's planned dollar bond next week.

LimakPort, a Turkish port operator, said on Tuesday it will look to come to the dollar market for a 15 year amortising bond with a coupon that steps up if the issuer fails to meet sustainability targets.

Standard Profil, the auto supplier which makes sealing for cars, was in the bond market on Tuesday looking to sell €275m of five year notes.

A campaign by a political opposition party questioning the deployment of Turkey’s FX reserves and a snub from the United States has put new pressure on the country’s bonds.