Turkish assets rally as Akbank loan cools fears of debt crunch
Turkey’s lira and bonds jumped after the nation’s second-largest listed lender refinanced a maturing foreign-currency loan, tempering concern that this year’s exchange-rate rout will fuel a debt crisis.
Akbank TAS said it had rolled over its syndicated loan, fueling optimism that the deal opens the way for other banks to refinance liabilities coming due by yearend. The lira gained almost 2 percent against the dollar while the 10-year government notes extended this month’s biggest rally in emerging markets.
The Turkish economy runs a current-account deficit of around 6 percent of output, and depends on foreign capital inflows to finance the shortfall. Much of that cash comes in through the nation’s lenders, which need to maintain access to international capital markets in order to keep credit flowing. Many analysts are concerned local banks will only be able to roll over a portion of their debt amid a rout that knocked off 40 percent of the lira’s value this year.
“The Akbank syndicated loan rollover was well received,” Henrik Gullberg, a strategist at Nomura Plc in London, told Bloomberg. “Technically, on lira, a break of 6 would be the focus now.”
The lira was 1.8 percent higher at 6.0030 per dollar as of 3:34 p.m. on September 27 in Istanbul, after briefly strengthening past the 6 mark earlier for the first time this month. The yield on 10-year government bonds fell as much as 64 basis points to 17.85 percent, the lowest level since July.
The rally in Turkish assets comes after the central bank raised interest rates by 625 basis points this month, arresting a currency slide that fueled the fastest pace of inflation in 15 years and piled pressure on companies that borrowed heavily in foreign currency.
China’s Tatwah is among parties looking to buy a special-purpose vehicle that owns a majority stake in Turk Telekom, Turkey’s largest phone company, according to four people with knowledge of the matter. The news is a sign for some investors that international capital is flowing back into the economy.
Speculation is also growing over a potential rapprochement with Western powers. President Recep Tayyip Erdogan visited Berlin and met with Chancellor Angela Merkel this week. Furthermore, optimism has picked up in the market that an American pastor who has been held in Turkey for two years on terrorism charges will be released on Oct. 12, ending a diplomatic standoff between the NATO allies.