Turkey

Despite the success of many emerging market sovereigns in issuing bonds in international markets this year, Turkey, typically a leading issuer, has been notable by its absence. And with its foreign exchange reserves running lower, the risks of it not being able to come to market at all could be mounting.

Bankers and investors say FIG issuance will return to the fore after a sovereign-dominated first half of the year. Three bank issuers this week showed that the market is open for non-sovereign issuers. As fears of a second wave of Covid-19 infections and November's US presidential elections threaten volatility, some say the usually quiet summer period may be inundated with EM issuance.

Akbank, the top tier Turkish bank, approached investors for a dollar benchmark bond on Tuesday. The deal comes amid expectations that emerging market investors have finally opened up for corporate and financial institution issuance.

Turkey Export-Import Bank has raised a €380m loan with a partial guarantee from the World Bank. The deal complements a successful first half of the year for Turkish lenders in capital markets, in which almost all the top tier banks have raised loans.

İşbank, Turkey's largest private bank by assets, is the latest financial institution from the country to refinance its existing debt, while managing to maintain competitive margins.

After a week of speculation over which central banks would provide Turkey with a currency swap line, its central bank has announced an increase to an existing arrangement.

Turkey’s Garanti Bank has raised a $592.4m-equivalent ESG-linked syndicated loan — the first of its kind signed by a bank. The deal, despite being launched at the beginning of the coronavirus crisis, went successfully, according to bankers, following a string of refinancings by other Turkish banks.

Yapi Kredi is the latest Turkish bank to refinance existing debt, following peers like Akbank and VakifBank. But bankers said that margins on its deal do not reflect current market conditions.

Turkey has stood out among emerging market countries for its rapid-fire approach to monetary policy, as it attempts to turbo-charge growth amid the coronavirus pandemic. But with sustained downward pressure on the lira, few foreign investors are willing to buy in. The crisis is also causing a hedging conundrum.

VakifBank, one of Turkey's top tier financial institutions, has refinanced an existing loan, with a rollover ratio of almost 90%. The deal comes amid growing uncertainty among capital markets issuers about capital raising and the reality of less advantageous market conditions.

Market participants have dismissed the viability of Turkey extending its swap line arrangements with the US Federal Reserve this week to enhance the country's access to dollars. They also noted that little has happened to change their bearish outlook on the sovereign.

Turkey’s Akbank has refinanced a syndicated loan with tighter margins than its existing facility, as lenders demonstrate unwavering appetite for Turkish debt.