Eas ng tens ons

Dünya Executive - - REPORT - Andreas Kolbe, strateg st, Barclays Cap tal

Market sentiment towards Turkey has calmed over the past few weeks, amid a de-escalation in U.S.-Turkey political tensions and Turkish entities’ ability to access internatio­nal capital markets. Turkey’s recent five year term eurobond issue, however, has partly reversed the normalizat­ion of the 5s10s curve, leaving it significan­tly flatter than most 5s10s curves of single-B/low-BB peer group countries. We expect Turkey’s 5s10s curve to steepen when Andreas Kolbe recent supply dynamics subside. On the corporate front, we rate Turkcell overweight in the Turkish non-financial corporate sector (which we also rate OW), predicated on the firm’s low net leverage, strong EBITDA margins, market-leading position in mobile data and pro-active FX hedging. We expect these attributes to allow the firm to retain its conservati­ve financial profile. Turkcell’s 2028s currently trade at around Z+480 basis points, approximat­ely 40 basis points back from the Turkish sovereign. The strong financial position, higher credit ratings, low issuance needs and lack of contingent liabilitie­s lead us to the conclusion that the credit should trade through the sovereign, as it has done at times in the past. (October 26)

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