Turkish bonds rise as markets wait for new cabinet to be announced
Turkey’s sovereign bond prices rose more than two cents on the dollar on Tuesday as markets waited for President Recep Tayyip Erdogan, the winner of Sunday’s presidential election runoff, to decide on a cabinet to run economic policy.
Prices of the country’s international notes were up across the curve, with longer-term bonds rising the most, Tradeweb data showed. The 2045 note gained 2.2 cents on the dollar and the 2043 bond rose 1.7 cents in the afternoon on Tuesday.
Turkey’s five-year credit default swaps (CDS) were down 39 basis points to 625 basis points from Monday’s close, according to S&P Global Market Intelligence. The cost of insuring exposure to Turkey’s sovereign debt started the year at 513 basis points. Erdogan is expected to announce his cabinet by the end of the week.
“There is hope that (Mehmet) Simsek returns … Hope but uncertainty,” said Timothy Ash, senior sovereign strategist at BlueBay Asset Management, referring to the market-friendly former finance minister. “Generally, the assumption is that whoever comes into power in terms of the economic team, the lira needs to be weaker.” [Reuters]
