Turkey is preparing to return to global bond markets for the first time since the lira’s implosion, according to people familiar with the matter.
The nation has picked banks including HSBC Holdings Plc to manage a sale of Islamic debt, known as a sukuk, which could happen this month, said the people who declined to be identified because the details aren’t public. The sale may be used to refinance about $2 billion of debt maturing this month, they said.
No decision has been made and Turkish officials may put off the deal if market conditions deteriorate, the people said.
Turkey’s Treasury and Finance Ministry declined to comment. A spokesperson for HSBC also declined to comment when contacted by Bloomberg.
The last time Turkey turned to foreign investors with a bond sale was in September, before President Recep Tayyip Erdogan’s insistence on cutting interest rates despite high inflation sent the currency into a tailspin. The lira ended the year more than 40% weaker, while the nation’s dollar debt handed investors a 5% loss in 2021, Bloomberg indexes show.
The sale would come amid a dearth of offerings from junk-rated issuers as accelerating inflation and the prospect of higher interest rates in developed nations saps appetite for riskier assets.
Only Pakistan and Paraguay have come to market so far this year among high-yielding sovereigns in emerging markets, raising a total of $1.5 billion, according to data compiled by Bloomberg. That’s the smallest amount since at least 2011, the data showed. The average yield for the asset class rose to 8% on Dec. 20, the highest since July 2020.
Bloomberg