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.