Turkey: Increasing the attractiveness of the lira, free market rules, measures

In the statement following the income-indexed bond financial product announced yesterday evening, the Ministry of Treasury and Finance said that Turkey was affected by a “global inflationary process”. According to this;

It is aimed to increase the attractiveness of TRY without compromising free market rules.

No concessions on fiscal discipline.

It is aimed to rein in public expenditures.

It was stated that macroprudential measures will continue.

While government domestic debt securities are borrowing with a certain maturity, income indexed bonds generally have a certain amount committed over the income of SEEs. There will probably be a return on the revenues of SEEs transferred to the budget, and the return to be generated as a reference here will be focused on the revenues of enterprises and institutions in which the state is a partner. Of course, since there are still many uncertain points, there is a need to see the sub-details. The issue of how the income, yield and maturity structure will be and which SEEs’ revenues will be discussed will be important. In an inflationary environment, the turnover increases of some institutions are very high compared to the CPI. Here, the return of the stock should be at least as much as or above the inflation rate, or it should be at an optimal ratio between CPI and PPI.

There were expectations that new moves could come in the markets for a while. Although the expectations that inflation-protected bonds might come after the first statements of the Treasury last night, led to the withdrawal in the USDTRY rate in the first place, it was observed that prices, especially the exchange rate, returned to their old levels after the decisions. We think that the market will want to understand the details of the new financial product while creating the pricing perspective in the first place. We will see the reflections as the sub-details of determining the maturity and income in the issuance of income-indexed bonds are revealed.

We see that there may be macroprudential measures and new measures and measures that will weight the liraization after the income-indexed bonds.

Kaynak
Hibya Haber Ajansı