Turkey

Vakifbank’s €500m five year covered bond has rallied after Moody’s cut its rating and those of five other Turkish covered bond issuers. The move implies that the rating downgrade has not delivered a fatal blow to prospective Turkish supply.

Some Turkish banks will have to pay an extra 25bp on loans after Moody’s downgraded 14 borrowers on Monday, triggering ratings ratchets. Vakifbank signed a loan refinancing just hours before Moody’s hit it with a downgrade.

Yapi Kredi Bank is in the market with its annual loan refinancing, as Turkey’s sovereign rating received its second downgrade of the year on Friday, putting Yapi in line to follow.

Moody’s cut Turkey’s investment grade rating to junk on Friday, as anticipated, but comments the agency made last week caught investors off guard. However, despite the initial sovereign sell-off, a rally has begun.

Nomura has added a Turkey specialist to its EM coverage team as it continues to build its EMEA emerging markets platform.

Turkey’s Isbank has signed its second annual syndicated loan for $1.04bn-equivalent. Like recent deals for the sector, Isbank’s loan includes a margin ratchet if the bank is downgraded.

Emerging market economic growth managed to hang on to much of its momentum over August, according to the latest release of the IHS Markit Emerging Market Composite PMI index.

Türk Ekonomi Bankasi (TEB) and Vakifbank have adopted margin ratchets in their latest loans as a swathe of Turkish banks face ratings downgrades.

Turk Ekonomi Bankasi (TEB) has signed a $567m loan, led by seven bookrunners, which includes the same margin ratchet as other Turkish banks Akbank and Vakifbank.

The margin for Vakifbank’s latest loan will increase if the bank is downgraded, the move follows Akbank which set the trend for the ratchet earlier this month in the face of ratings downgrades for Turkish banks.

Sukuk stepped into the spotlight after JP Morgan decided to include Islamic bonds in its EM bond indices, but while eligibility will give the asset class a boost, it will be a while before the product is more broadly used.

Just over a month has passed since the attempted coup in Turkey. With a backlog of issuance from the country sitting in the pipeline, GlobalCapital discussed the investment case with four London-based fund managers.