JPMorgan (New York/JPM) Emerging Markets Debt Fund has acquired $2.4mn worth of eurobonds (XS2692231975) sold by government-run Turk Eximbank, Bloomberg reported on December 1.
As of end-October, the fund also held two papers, namely $6mn worth of paper US900123DF4 and $1mn of paper US900123DB31, sold by Turkey’s Treasury.
The overall fund size stood at $564mn. Turkish papers accounted for a 5% share in the fund.
On October 25, Turk Eximbank sold $500mn of the eurobonds in question due January 2027 at a coupon rate of 9% and a yield to investor of 9.125% (priced at 99.586).
In November and December 2022, the Treasury sold $3.5bn of the US900123DF4 paper due January 2028 in two auctions. The paper pays a 9.875% coupon while the yield declined to 9% (priced at 103.46) in the second auction from 10% (priced at 99.454) in the first auction.
In January 2021, the Treasury sold the US900123DB31 paper due January 2026 at a coupon rate of 4.75% (priced at 99.342).
Turkey currently has a B/Stable rating, five notches below investment grade, from Fitch Ratings, a B3/Stable, six notches below investment grade, from Moody’s Investors Service and a B/Positive, five notches below investment grade, from S&P.
Fitch sees local banks a notch below Turkey’s sovereign rating while the other two rating firms see them as in line with the sovereign.
In June, following the appointment of Turkey’s post-election new economic team, the Erdogan regime launched a monetary normalisation policy that is still ongoing. It brought the policy rate to 40% in November from 8.5% in June.
Looking at the global markets, a positive sentiment prevails. The expected new year rally should begin soon. Through February, the positivity may sustain.
Turkey’s five-year credit default swaps (CDS) remain below the 400-level, while the yield on the Turkish government’s 10-year eurobonds remains below the 9%-level.
The USD/TRY rate is, meanwhile, still heading north. On September 21, the pair once again broke through the horizontal barrier set at the 27.00-level. The latest record high, registered on December 1, is 28.9629.
Since November 27, the Turkish government has scrapped its ‘five/10 kurus (Turkish cents, pronounced as kurush) devaluation per day policy’. It has again been aiming to draw a straight line at around the 28.90-28.95-levels. The annual rise in the USD/TRY, controlled by the Turkish government, has been kept constant at 55% since last month.
Following the local elections to be held in March, Turkey’s policy rate will reach its peak. The finance industry will then be welcomed in for the rate-cutting feast. Double returns from the rising prices of lira papers and lira appreciation will be written.
As of November 24, Turkey’s Treasury had a total of 46 outstanding eurobonds, including six sukuk papers. Five papers are EUR-denominated and two papers are Samurai bonds, while the others are USD-denominated.
The combined sum of the Treasury’s papers amounted to $95bn in nominal terms and $89bn at market value. Foreigners held 34% of the papers, down from 59% in 2019.
Turkish banks had a total of $26bn worth of outstanding eurobonds. Foreigners held a 49% share.
Corporates had $11bn worth of oustanding papers. The foreigners’ share stood at 86%.
Turkish issuers' major outstanding eurobonds maturing between 2026 and 2029 | |||||
Issuer | ISIN | Coupon | Volume (mn) | Issuance | Maturity |
Vakifbank (VAKBN) | XS2266963003 (green) | 6.50% | $750 | Dec 1, 2020 | Jan 8, 2026 |
TSKB (TSKB) | XS2281369301 (green) | 5.875% | $350 | Jan 8, 2021 | Jan 14, 2026 |
Treasury | US900123DB31 | 4.75% | $1,750 | Jan 26, 2021 | Jan 26, 2026 |
Eximbank | XS2395576437 | 9.375% | $500 | Jan 24, 2023 | Jan 31, 2026 |
Akbank | XS2131335270 | 6.80% | $500 | Jun 30, 2020 | Feb 6, 2026 |
Treasury | XS1909184753 | 5.20% | €1,500 | Feb 16, 2026 | |
Ziraat Bank | XS2274089288 | 5.375% | $600 | Jan 26, 2021 | Mar 2, 2026 |
Sisecam | XS1961010987 | 6.95% | $700 | Mar 20, 2019 | Mar 14, 2026 |
Treasury | US900123CJ75 | 4.25% | $1,500 | Apr 14, 2026 | |
Pegasus (PGSUS) | - | 9.25% | $375 | Apr 30, 2021 | Apr 30, 2026 |
Arcelik (green) | - | 3.00% | €350 | May 20, 2021 | May 27, 2026 |
Eximbank | XS2332876106 | 5.75% | $750 | Jun 29, 2021 | Jul 6, 2026 |
Hyundai Assan | XS2362559481 | 1.63% | $300 | Jul 6, 2021 | Jul 12, 2026 |
Ziraat Bank | US90014TAH41 | 9.50% | $500 | Jan 25, 2023 | Aug 1, 2026 |
Vakifbank (VAKBN) | XS2386558113 | 5.50% | $500 | Sep 10, 2021 | Oct 1, 2026 |
Treasury | US900123CK49 | 4.875% | $3,000 | Oct 9, 2026 | |
Eximbank | XS2692231975 | 9.00% | $500 | Oct 25, 2023 | Jan 28, 2027 |
Treasury | US900123CL22 | 6.00% | $3,250 | Mar 25, 2027 | |
Istanbul Municipality (IBB) | XS2468421248 | 10.75% | $305 | Apr 5, 2022 | Apr 12, 2027 |
Treasury | XS2361850527 | 4.375% | EUR1,500 | Jun 30, 2021 | Jul 8, 2027 |
Treasury | USM88269US88 | 8.60% | $2,000 | Mar 18, 2022 | Sep 24, 2027 |
Treasury | US900123DF4 | 9.875% | $3,500 | Nov 7/Dec 1, 2022 | Jan 15, 2028 |
Treasury | US900123CP36 | 5.125% | $2,000 | Feb 17, 2028 | |
Turkcell | XS1803215869 | 5.80% | $500 | Apr 11, 2028 | |
Anadolu Efes (AEFES) | XS2355105292 | 3.375% | $500 | Jun 22, 2021 | Jun 29, 2028 |
Arcelik (ARCLK) | XS2695038401 | 8.50% | $400 | Sep 25, 2023 | Sep 25, 2028 |
We Soda (UK/Ciner) | US92943TAA16 | 9.50% | $800 | Sep 28, 2023 | Oct 6, 2028 |
Vakifbank (VAKBN) | XS2677517497 (green) | 9.00% | $750 | Sep 12, 2023 | Oct 10, 2028 |
Yapi Kredi Bank (YKBNK) | XS2445343689 | 9.25% | $500 | Sep 13, 2023 | Oct 16, 2028 |
Yapi Kredi Bank (YKBNK) | XS2724475194 | 9.25% | $300 | Nov 20, 2023 | Oct 16, 2028 |
TSKB (TSKB) | XS2678232781 | 9.375% | $300 | Sep 19, 2023 | Oct 19, 2028 |
Treasury | US900123CQ19 | 6.125% | $2,750 | 2018 - 2021 | Oct 24, 2028 |
Mersin Port | US590454AC80 | 8.25% | $600 | Nov 8, 2023 | Nov 15, 2028 |
Istanbul Municipality (IBB) | XS2730249997 (green) | 10.50% | $715 | Nov 29, 2023 | Dec 6, 2028 |
TAV (TAVHL) | US87216EAA47 | 8.50% | $400 | Nov 30, 2023 | Dec 7, 2028 |
Coca-Cola Icecek (CCOLA) | XS2434515313 | 4.50% | $500 | Jan 14, 2021 | Jan 20, 2029 |
Treasury | US90014TAJ07 | 9.375% | $2,250 | Mar 8, 2023 | Mar 14, 2029 |
Treasury | US900123CT57 | 7.625% | $3,000 | Jan 16, 2019 | Apr 26, 2029 |
Table: Turkish issuers' major outstanding eurobonds maturing between 2026 and 2029.
So far this year, Turkish issuers have sold $17bn worth of eurobonds across 19 auctions.
In 2022, Turkish borrowers sold $12bn of eurobonds across eight tenders. The Treasury was the dominant player, raising $11bn in five tenders. It redeemed $8bn on four papers during the year.
In 2023, Turkish eurobond sellers are supposed to redeem a total of $11bn across 15 papers. In the year to date, $9bn across 13 papers has been redeemed.
On December 10, Isbank (ISCTR) is to redeem a $400mn paper (XS1003016018), which pays a 7.85% coupon.
Meanwhile, Turkey’s finance minister Mehmet Simsek is still talking about selling bonds worth $8.5bn for earthquake recovery efforts and $3bn for UAE export credits.
Awaited eurobond auctions by major Turkish issuers | |||||
Up to USDbn | Sold | Type | |||
Dec 1, 2023 | Sekerbank (SKBNK) | Board mandate | 0.3 | - | green |
Dec 1, 2023 | Sekerbank (SKBNK) | Board mandate | 0.3 | - | eurobond |
Nov 22, 2023 | Istanbul Municipality (IBB) | SPK Approval | 0.715 | Nov 29, 2023 | eurobond |
Nov 22, 2023 | TAV (TAVHL) | SPK Approval | 0.75 | Nov 30, 2023 | papers abroad |
Nov 22, 2023 | Destek Yatirim Bankasi | SPK Approval | 0.03 | - | papers abroad |
Nov 20, 2023 | Isbank (ISCTR) | Board mandate | 5 | - | eurobond |
Nov 20, 2023 | Isbank (ISCTR) | Board mandate | €0.3 | - | mortgage-backed |
Nov 15, 2023 | Garanti (GARAN) | SPK Approval | €0.30 | - | mortgage-backed |
Nov 2, 2023 | Aktifbank | SPK Approval | TRY0.75 | - | papers abroad |
Oct 27, 2023 | Pasha Yatirim Bankasi | SPK Approval | 0.025 | - | papers abroad |
Oct 25, 2023 | Ziraat Katilim Bankasi | SPK Approval | 0.5 | Nov 6, 2023 | sukuk |
Oct 18, 2023 | QNB Finansbank (QNBFB) | SPK Application | 4 | - | papers abroad |
Oct 18, 2023 | QNB Finansbank (QNBFB) | SPK Application | 1 | - | subordinated |
Oct 9, 2023 | QNB Finansbank (QNBFB) | Board mandate | 0.3 | - | subordinated |
Table: Awaited eurobond sales by Turkish issuers.