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March 15, 2019 www.intellinews.com I Page 3
a cliff,” Nora Neuteboom, a Netherlands-based economist at ABN Amro, told Reuters.
Major election issues
Rising prices, especially for food, and high unemployment, have become major election issues, although government officials insist the worst of Turkey’s economic difficulties is over, and some analysis supports that view. Finance minister Berat Albayrak has asserted that Turkey is on track for a rapid recovery, with growing exports and tourism income to be key drivers
of growth. But there is significant doubt as to whether Turkey can really manage a V-shaped recovery, with deleveraging pressures in evidence across the economy.
If the Erdogan administration survives the local elections relatively unscathed, it will know at least that it is not scheduled to face another election for another four years. And prior to the polls it has another card up its sleeve — a recession is typically technically defined as two consecutive quarters of negative growth, but Turkish economy officials have suggested that a year-over-year measure is the well-known approach used in Turkey to ascertain when a recession has begun. Turks may therefore not be officially advised on whether the country is in a recession until the first-quarter GDP data is put out.
“The worst of the downturn may now have passed, the weak carry over means that we expect GDP to decline by 2.5% this year,” Jason Tuvey of Capital Economics said in a research note, noting that
the Capital forecast is much gloomier than that of the consensus, and adding: “Investment dropped by 3.6% q/q in Q4. That was a better performance compared with Q3 and may reflect the easing
of financial conditions over the quarter. The one crumb of comfort is that net trade provided another sizeable boost to the economy. Exports rose by a fairly solid 1.4% q/q whereas imports fell by 4.6% q/q.”
“The low-profile indicators available for the start of 2019 suggest that the downturn has passed its
trough. Inflation has fallen back, financial conditions have continued to ease and the government has pro- vided some fiscal stimulus ahead of March’s local elections. Industrial production figures for January due on [March 14] will provide a clearer steer on how the economy has shaped up,” Tuvey added.
$500mn eurobond
Meanwhile, on the debt markets, Turkish glassmaker Sisecam sold $500mn worth of 7-year USD-denominated eurobonds at a 6.95% coupon rate, the company said on March 8 in a bourse filing. The yield to the investor stood at 7.25%, Reuters reported.
Private lender Yapi Kredi Bank has issued $500mn worth of 5.5-year USD-denominated eurobonds at a yield and coupon rate of 8.25%, the lender said on March 8 in a bourse filing.
“It’s interesting to see the market so busy,” an emerging markets syndicate banker told Global Capital on March 7, adding: “Turkey does still look like good value.”
The Capital Markets Board (SPK) has approved the Turkish Development Bank’s (TKB’s) second wealth management fund’s application to sell TRY1bn worth of asset-backed paper based on mortgage- backed securities to be issued by Isbank, Akbank and Yapi Kredi Bank, according to the SPK’s latest weekly bulletin published on March 8.
The bulletin also showed that Turkcell received the green light to sell $750mn worth of eurobonds.
Yapi Kredi Bank has received approval from
the SPK to issue TRY400mn worth of 5-year mortgage-covered bonds abroad, the lender said on March 11 in a bourse filing.
“Rebound in TRY lending striking”
“The rebound in Turkey's TRY-denominated lend- ing is striking, especially its composition. Private domestic & foreign banks are consolidating still, so — unlike any previous period — the lending rebound [in Q1] is almost entirely due to public