Fitch Ratings reported that foreign investors started to return after the Central Bank of the Republic of Turkiye increased the policy rate to 50% to control inflation.
International credit rating agency Fitch Ratings stated that Turkiye’s foreign currency (FC) debt instrument issuances have revived with the increase in investor sentiment, and this is a sign that near-term refinancing risks have decreased.
In Fitch Ratings’ Turkiye Debt Capital Markets Dashboard report for the first quarter of this year, it was indicated that over the next 12-24 months, Turkiye’s debt capital markets (DCM) issuances will continue to be driven predominantly by country financing objectives, fund diversification goals, and the agenda for developing Islamic finance.
It was informed that DCM issuances are expected to be mostly opportunistic, considering the high costs, and that DCM is expected to exceed $450 billion in the medium term and the share of sukuk issuances is expected to exceed 20%.
“The recent revival in foreign currency debt instrument issuances is a sign that near-term refinancing risks have decreased as investor sentiment has increased since Turkiye adopted more traditional macroeconomic policies,” the report said.
“Non-resident investors are returning to Turkiye”
The report pointed out that non-resident investors started to return after the Central Bank of the Republic of Turkiye increased the policy interest rate to 50% to control inflation.
The report noted that the general government debt is low with a strong income base, manageable debt amortizations and improved financing conditions, and stated that Turkiye issued $10 billion of bonds in foreign markets in 2023 and a similar amount is envisaged for this year in the current financing plan.
The report indicates signs that rated banks and companies have returned to foreign currency debt issuance markets since the second half of last year, reflecting improved access and strategic moves they are making to sustain their assets by locking in at more acceptable prices, although still high after a prolonged period of very limited issuance.
Source: AA / Prepared by Irem Yildiz