Turkey

Turkey’s spreads have not recovered almost a week after Moody’s junked its credit rating, but bankers insist the sovereign and other Turkish borrowers will have access to the capital markets once stability has returned, even if borrowing costs rocket. Virginia Furness reports.

Moody’s move to junk Turkey's rating last Friday was met with howls of disdain from investors after they believed the agency had hinted there would be no downgrade. But no diligent fund manager should be moving positions based on a throwaway comment from a single analyst.

Turmoil in Turkish bond markets put a dampener on Monday’s open after Moody’s junked the sovereign's credit rating. But with activity in the Middle East and, after a two year absence, Nigeria, the stage is set for a busy few weeks in EM.

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.