Turkey

Turkish banks are running late on their syndicated loan refinancing timetables amid political noise in the country, and loans bankers say it will soon be too late for the banks to rollover the deals and will instead have to take the unusual step of repaying the debt.

Turkey’s president Recep Erdoğan delivered a shock to investors on Monday, announcing a cabinet reshuffle in which he removed market favourites Mehmet Simsek, who was deputy prime minister, and Naci Agbal, minister of finance. He appointed his son-in-law Berat Albayrak, who previously served as energy minister, as finance minister.

Turkish banks have enough foreign currency liquidity to withstand a prolonged capital market shut out, according to ING. While this remains unlikely, small signs of deterioration have begun to show in terms for the biggest source of FX funding in the country’s banking system - syndicated loans.

Factors internal and external to the emerging markets are this week combining to stymie new issuance.

The resounding victory of Turkish president Recep Tayyip Erdoğan in this weekend’s presidential election has driven Turkish equities even lower, as concerns rise over the overheating economy. But the president could turn bears into bulls if he stabilises the economy, and some investors will jump at the chance to buy cheap Turkish equities.

Turkish assets gave back early gains on Monday morning as investors digested the news of the victory of Recep Tayyip Erdoğan and his AK Party (AKP) in the country’s presidential and parliamentary elections.

Turkey’s Sasa Polyester is on track to take out a €231m export credit agency-backed loan to build a new facility in its home country.

Turkey’s Garanti bank has sold its first ever social bond, a $75m private placement. The International Finance Corporation purchased the bond as part of its Banking on Women Programme.

Turkey’s Garanti bank has sold its first ever social bond, issuing a $75m private placement. The bond was purchased by the International Finance Corporation as part of its Banking on Women Programme.

Emerging market loans bankers are clinging to their tranquil view of Turkey amid soaring bond yields in the country. The insular nature of borrowing practices there means international lenders are exposed almost exclusively to Turkey’s banks.

The recovery of Turkish asset prices this week is less the result of prudent monetary policy — though that certainly helped — and more a lesson in the benefits of the personal touch and that markets are, ultimately, populated by humans.

Turkish dollar bonds outperformed in a heavy market this week after the Central Bank of the Republic of Turkey (CBRT) moved to simplify rates in order to protect the lira. The recovery of the lira to below TL4.5 to the dollar has been taken by the market to indicate that last week’s rate hike was a success.