Page 6 - TURKRptDec21

Turkey’s 5-year credit default swaps (CDS), meanwhile, surpassed the 500-level.
As of December 2, no signs of a U-turn have been visible as yet; on the contrary, Erdogan, famous for his obstinacy, has been reiterating that he would insist on cutting the policy rate further.
Turkey’s currency regime is an undeclared managed float. There are not too many usable reserves with which to intervene.
On December 1, the central bank announced that it was directly intervening in the FX market.
The currency tension continues. New records will arrive until Erdogan changes his mind on cutting interest rates in a high inflation environment.
There is currently a consensus suggesting that Turkey is in a financial and economic crisis, just as it was in August 2018. We have been arguing that Turkey entered a full-blown collapse process on all fronts, which includes a financial and economic depression, better definable as a collapse, with the failed coup attempt in July 2016. And, it has never recovered since.
A crisis in an emerging market brings anxieties surrounding contagion. However, Turkey’s case is idiosyncratic.
BANG AND SHUDDER II: South Africa detected on November 24 a new coronavirus (COVID-19) variant, named Omicron, and tension is growing around the world again.
A new episode in the Turkish banks drama: Majority shareholders are buying additional stakes to avoid further collapses in share prices. They console themselves as they are buying at historically low prices. Opportunity costs shall be avoided. UniCredit (Milan/UCG) is exiting from Yapi Kredi (YKBNK). BBVA (Madrid/BBVA) is to hold a voluntary tender call for listed shares of Garanti BBVA (GARAN).
Effects of the cheap loan boom are becoming visible: Net income of the state-owned banks plunged 56% y/y in January-September while private banks boosted their profit by 48% y/y.
DONE: The autumn season for Turkish banks’ syndicated loan renewals was completed. Nine banks renewed around $6bn worth of syndicated loan facilities at a combined renewal rate of 102% (See details under Section 5.3).
Foreign companies’ interest in Turkish manufacturers is on the rise. The main theme in recent M&As in Turkey centres on foreign buyers taking over the debt of indebted manufacturing companies (See Section 5.3).
Turkey’s auto market is feeling the pressure of the global chip crisis. Ford Otosan (FROTO) and Oyak Renault halted production again.
Rapid grocery delivery company Getir signed an agreement to acquire British peer Weezy.
Gaming start-ups remain hot favourites on the international market.
6 TURKEY Country Report December 2021 www.intellinews.com