Turkey's sovereign wealth fund (TWF, or TVF) attracted $9.5bn worth of bids in a eurobond auction held on September 3, IFR reported.

In the auction, the fund sold $500mn of a five-year paper at a coupon rate of 7% and $500mn of a 10-year paper at 7.75%, raising $1bn in all.

Thirteen banks – BBVA, Citi, Emirates NBD, ING, Bank ABC, BofA Securities, First Abu Dhabi Bank, ICBC, IMI Intesa-Sanpaolo, JPMorgan, SMBC, Societe Generale and Standard Chartered – acted as intermediaries in the deal.

Political stress

On September 2, the Istanbul 45th (Asliye Hukuk) civil court of first instance triggered another round of political stress in Turkey by appointing a board of trustees to take over the main opposition Republican People’s Party’s (CHP’s) provincial headquarters in Istanbul.

September 15, a critical date

The ruling could result in the appointment of trustees at the party national headquarters. That outcome could result from a trial being held by the Ankara 42nd (Asliye Hukuk) civil court of first instance. The next hearing in this case will be held on September 15.

Given the possible implications that have been set in motion, shares on the Borsa Istanbul tumbled, while Turkey’s eurobonds and domestic lira bonds also reflected the growing political tensions.

September 8, trustee to arrive at CHP Istanbul HQ

As of September 4, the CHP management remained in a defiant mood, and Gursel Tekin, head of the trustee board, declared that he would arrive at the party’s Istanbul headquarters on Monday September 8.

Tekin said he would not force entry to the building with police assistance, but added that he knows how he will get into the building, though he did not further elaborate on his plans.

The next hearing of the CHP Istanbul trial held by the Istanbul 45th court is scheduled for October 3.

TVF considered delaying

On September 3, Bloomberg quoted unnamed people as saying that TVF was considering postponing the auction.

The sovereign wealth fund, or SWF, held talks with banks on the morning of that day to discuss whether to delay the sale, but ultimately decided to go ahead with the issuance, according to the cited people.

At the auction, the spreads over US Treasuries and Turkey’s 5-year credit default swaps (CDS) were set in parallel with recent eurobond auctions held by Turkish issuers.

Despite the tensions roiling the country’s bond markets, Turkey’s CDS remain below the 300-level, while the yield on the Turkish government’s 10-year eurobonds is still hovering around the 7%-level.

The TVF has a BB-/Stable rating from Fitch Ratings.

TVF’s third eurobond

In February 2024, the TVF, launched in 2016, sold $500mn of a five-year debut eurobond (XS2764457235) at a coupon rate of 8.25% and yield to investor of 8.375%.

In October, the TVF sold $750mn of a five-year debut sukuk paper (XS2911679004) at a coupon rate of 6.95% (priced at 100.00). In January, it sold an additional $250mn of the paper via a tap issue.

See the major eurobond sales by Turkish issuers here. 

TVF also borrows in loans.