Turkey

The rout of the incumbent president Mauricio Macri in the first round of the Argentina elections has investors worried. Argentina’s debt, and that of other 'vulnerable' credits, suffered a huge sell-off early on Monday. But bankers believe that it was not so bad that the primary market will not reopen in September.

Emerging market loan bankers have been trying to understand the impact on syndicated lending of the US’s latest sanctions on Russia. The proscriptions have instilled more uncertainty into a collapsing market.

The US Federal Reserve delivered a 25bp rate cut as expected on Wednesday, but the signalling failed to satisfy investors desperate for more accommodative policy, causing a mild sell-off in emerging markets.

Investors’ fears were realised on Thursday when the Turkish central bank lowered its key policy rate by 425bp. Analysts joined them in saying that the move will provoke a return of inflation, damage the lira and complicate loan pricing.

Investors’ fears were confirmed on Thursday when the Turkish central bank lowered its key policy rate by 425bp. Analysts joined them in saying that the move will provoke a return of inflation and damage the lira.

Turkey’s bonds have put up an incredible display of resilience to geopolitical shocks so far, but investors fear that an aggressive cut to the main policy rate will cause inflation to return and puncture confidence in the country’s economy.

As Turkish bank borrowers prepare to refinance existing debt, a plethora of domestic and geopolitical troubles has once again brought pricing into question. Though secondary market spreads remain tight, bankers say primary issuance could widen.

The US has ousted Turkey from the F-35 stealth fighter programme because the country has begun receiving components of the Russian S-400 missile system. Meanwhile, the central bank’s credibility is damaged and an interest rate decision is only a week away. Does the bond market care? It seems not.

Hazem Shawki is set to join Credit Suisse from Goldman Sachs in order to lead its investment banking operations in the Middle East, Turkey and Africa, with a particular focus on pushing further into the Saudi Arabian market.

Turkey took delivery from Russia of the first components of its new S-400 missile system on July 12. The US is readying a new bevy of sanctions against the country, but investors say their effect will be limited.

After one of Turkey’s strongest months in capital markets of the year, this weekend the country’s president shocked investors by firing the governor of Turkey’s central bank. While Turkish assets sold off sharply on Monday, they recovered during the week. But some onlookers are worried that the recovery reflects desperation for yield, not a reduction in risks to Turkey’s economy.

Turkish private sector development bank, Turkiye Sinai Kalkinma Bankasi (TSKB), has closed its annual loan refinancing. The deal was signed amid secondary spreads for Turkish bank paper tightening and as a precursor to the next wave of refinancings for the country's financial institutions.