Turkey

A pair of Turkish banks has returned to the MTN market after a 100bp rally in their secondary levels, marking the first bonds since the failed military coup in Turkey on July 15 and bringing hope that by September, public syndicated bonds may be back on the table.

HSBC has let go of a DCM banker who had spent over a decade with the bank, according to market sources.

After the initial calm in Turkish loan trading following the country's attempted military coup, a few trades have come to market, finally showing the radical impact of the event on pricing.

Turkish banks have long enjoyed cheap one year loans from international banks but it is now more obvious than ever that the sector should have made hay while the sun shone.

They may be locked out of bond markets but Turkey’s financial institutions still have access to loan funding. But as this week showed, following the attempted coup in the country on July 15, the deals they strike are changing shape. Robert Cooke reports.

Yapi Kredi chose to cancel a deal before settlement last week, following the attempt coup in Turkey, and a four point drop in the bond's price. The decision was wise and investor friendly, but it's not a new precedent in emerging markets.

The surging rally in credit markets since the start of the month hit an impasse this week, as trader caution set in ahead of key policy decisions by the Bank of Japan on Friday and the Bank of England next week.

Turkish issuers have $2.5bn of public international bonds scheduled to mature before the end of this year but will have a tough time accessing bond markets aft the attempted coup of two weeks ago. But an EM syndicate banker said that most of those maturing bonds have already been refinanced.

Türkiye İş Bankası (Isbank) launched a loan on Friday, arranged by National Bank of Abu Dhabi and Standard Chartered.

The loan market has closed at least two deals over the past week, mostly unperturbed by the upheaval in Turkey, although the price of refinancing will likely increase later in the year, bankers say.

An attempted coup in Turkey last Friday threw its borrowers into a maelstrom of pulled bonds, credit rating uncertainty, and the country itself into a three month state of emergency. Unlike their loan market counterparts, bond and money market investors have been wary of calling the bottom of the resulting sell-off, but the damage is contained as EM bond inflows enjoyed another record week, writes Francesca Young.

Last week’s failed Turkish coup, and the resulting crackdown, has spooked holders of Turkey’s dollar denominated government bonds.