Turkiye’s 5-year credit risk premium fell below 300 basis points for the first time since March 2021
While the new economic management that came to power after the presidential elections increased the interest in TL assets by reducing the uncertainties regarding the Turkish economy, these steps are also receiving international response.
While the Central Bank of the Republic of Turkiye (CBRT) has increased the policy rate from 8.50% to 40% as part of the fight against inflation since the end of May, it has also taken many simplification steps.
While these steps increase interest in Turkish lira assets, positive statements from international financial institutions continue.
Accordingly, international credit rating agency Standard & Poor’s (S&P) made an off-calendar assessment due to recent policy regulations in Turkiye and confirmed Turkiye’s credit rating as “B” and changed its credit rating outlook from “stable” to “positive”.
Analysts stated that the international credit rating agency Moody’s is expected to evaluate Turkiye after the markets close on Friday, December 15, and that Moody’s may make an improvement in Turkiye’s credit rating and rating outlook with the impact of these developments.
In addition, the Central Bank reserves increased by $42.9 billion since the end of May and reached an all-time high of $141.4 billion.
Total reserves, which have been increasing continuously for the last 11 weeks, continue their course above the 2022 year-end level of $128.8 billion.
The continued decline in dollarization and foreign inflows into the stock and bond markets have also recently supported the Central Bank’s net reserves.
According to the data released today by the CBRT, the weekly total net portfolio inflow in the week of December 8 was recorded as $1 billion 453.8 million, the strongest portfolio inflow since July 21, 2017.
As the predictability of the Turkish economy increases, Turkiye’s 5-year credit risk premium begins to trend downwards. Turkiye’s CDS fell below 300 basis points for the first time since March 2021, falling from 700 basis points in May to 299.9 basis points.
In the “CEEMEA Strategy Notes” report prepared by Deutsche Bank yesterday, it was noted that the carry trade opportunity in TL came to the fore, while Bank of America had previously published a positive report for Turkish banks.
With these developments, the BIST 100 index in Borsa Istanbul, which accelerated the upward trend led by bank stocks, rose by more than 3% and exceeded 7,750 points.
Source: Trthaber / Prepared by Irem Yildiz