Eas ng tens ons

Dunya 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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