Tur­key deep­ens cap­i­tal mar­kets with at­trac­tive se­cu­ri­ties, re­ceives high in­vestor de­mand

Turk­ish mar­kets saw a ma­jor break­through Fri­day with the is­sueance of the largest vol­ume of as­set-backed se­cu­ri­ties, as pub­lic and pri­vate is­suers re­ceived a pro­foundly high de­mand in a bid to deepen cap­i­tal mar­kets with less costly in­stru­ments

Daily Sabah (Turkey) - - Money -

UNTIL Fri­day’s is­suance, the size of the Turk­ish as­set-backed se­cu­ri­ties had not ex­ceeded TL 1 bil­lion.

The bids for all the as­set-backed se­cu­ri­ties were col­lected Dec. 4-6.

Three state lenders and one pri­vate bank, in­clud­ing Zi­raat Bank, Halk­bank, Vakıf­bank and Garanti Bank, es­tab­lished a col­lat­eral pool of high-qual­ity as­sets for the is­suance of these as­set­backed se­cu­ri­ties, which were in­deed mort­gage-backed se­cu­ri­ties.

The state banks each sold a nom­i­nal value of TL 1 bil­lion of mort­gage­backed se­cu­ri­ties, while Garanti Bank sold TL 150 mil­lion.

The As­set Fi­nance Fund of the Turk­ish Devel­op­ment and In­vest­ment Bank used the mort­gage-based se­cu­ri­ties of these four banks and is­sued as­set­backed se­cu­ri­ties which sold to 118 in­vestors on Fri­day. The as­set-backed se- cu­ri­ties pay yields 80 ba­sis points higher than the 5-year gov­ern­ment bond.

With this is­suance, the banks col­lected debt cheaper than the cen­tral bank fund­ing rate, which is cur­rently 24 per­cent. The banks se­cured liq­uid­ity re­lief at an in­ter­est rate of 18 per­cent.

The min­istry’s state­ment also ex­plained the credit rat­ing of these as­set­backed se­cu­ri­ties. Ja­pan Credit Rat­ing Eura­sia Rat­ing cat­e­go­rized them as highly in­vestable with a long-term sov­er­eign rat­ing of AAA.

“The struc­ture of the se­cu­ri­ties, the pub­lic-pri­vate co­op­er­a­tion in their is­suance and the suc­cess of sell­ing such a large amount of se­cu­ri­ties at one auc­tion is a mile­stone for Turk­ish cap­i­tal mar­kets,” the min­istry said in the state­ment.

The mo­ti­va­tion of the Turk­ish fi­nance world will fur­ther un­leash projects to reach qual­i­fied in­vestors in do- mes­tic and for­eign mar­kets and fur­ther deepen fi­nan­cial mar­kets.

The Trea­sury and Fi­nance Min­istry also said that the as­set-backed se­cu­ri­ties would be quoted on Borsa Istanbul, the stock exchange.

In a note to Daily Sabah, GCM Forex Re­search Ex­pert En­ver Erkan drew at­ten­tion to the high de­mand for as­set­backed se­cu­ri­ties, which mul­ti­plied the nom­i­nal value by 2.43 times. He also stressed that the is­suance is a more suc­cess­ful way of col­lect­ing debt while en­sur­ing the di­ver­sity of fi­nan­cial in­stru­ments.

Cit­ing Trea­sury and Fi­nance Minister Berat Al­bayrak’s state­ments re­gard­ing the ex­pec­ta­tion that in­ter­est rates will de­crease in the up­com­ing pe­riod, the in­creas­ing de­mand of qual­i­fied and for­eign in­vestors’ in the Trea­sury’s auc­tions are pos­i­tive de­vel­op­ments for fi­nan­cial mar­kets.

More­over, a re­cent amend­ment in the in­di­vid­ual pen­sion sys­tem in­creased the state’s con­tri­bu­tion in the fund from 25 per­cent to 30 per­cent and the funds are al­lowed to in­vest in as­set-backed se­cu­ri­ties with state con­tri­bu­tion, a reg­u­la­tion that the Trea­sury and Fi­nance Min­istry an­nounced this week. The move was per­ceived as part of at­tempts to en­cour­age in­vestors to di­ver­sity their port­fo­lios and bring in less costly al­ter­na­tives to debt col­lec­tion.

Fol­low­ing the an­nounce­ment of the is­suance, bank­ing shares saw a sig­nif­i­cant in­crease on Fri­day. The bench­mark bank­ing in­dex of Borsa Istanbul, BIST BANKA, rose to 117,421 with a 2.35 in­crease at 4:50 p.m. lo­cal time.

Halk­bank’s shares soared 4.97 per­cent, while shares of Vakıf and Garanti each surged by 2.37 per­cent and 2.45 per­cent, re­spec­tively.

Turk­ish devel­op­ment bank’s as­set fi­nance fund is­sued the largest vol­ume of as­set-backed se­cu­ri­ties Fri­day and the de­mand of 118 in­vestors on these se­cu­ri­ties was 2.43 times higher than the orig­i­nally planned amount of TL 3.15 bil­lion ($597.26 mil­lion).

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