IS Investment: What happened to Eurobonds this week?

Following the unexpected change of the Central Bank president over the weekend, Turkish Eurobond yields started the week with a very sharp expansion. After closing weekly at 310, the country risk premium approached 500 basis points at the beginning of the new week and rose to levels prior to November. Unlike the strong sales experienced in previous periods, the activity of foreigners on the commercial side was more limited and demand from the local side avoided the decline and some of the losses were offset in a short time.

Turkish Treasury Eurobonds opened at the beginning of the week with an expansion of 150-200 basis points. While selling activity from foreigners put more pressure on near maturity, demand for near maturity securities was higher on the local side after higher yields. Towards the end of the day, although inbound purchases did cause some recovery, returns after resale sales expanded once again to the levels they saw after the first few sales.

The negative atmosphere continued until the middle of the week turned into more cautious optimism in the second half of the week, and yields contracted again in the 25-30 basis point range. Although the sales demands of foreigners turned a bit more towards buying, after the open short positions in long-term securities began to close, liquidity remained weaker on this side, and short and long-term transactions medium term exhibited a more balanced behavior. transaction activity. Yields on assets with a ten-year maturity expanded between 100 and 150 basis points, while the long side increased in the region of 60 to 70 basis points.

On the company side, stocks that remained on the positive side compared to treasury assets in recent weeks expanded by 200-220 bps on the senior side at the beginning of the week, while subordinated stocks were they expanded by 400-600 bp, non-financial. companies were less affected by sales and returns were 100- It increased in the range of 150 basis points.

In the second half of the week, the fact that the liquidity of TL offshore gained better levels compared to the beginning of the week was not tested again and the peaks observed in TL at the beginning of the week were positively reflected in the assets of the company. Foreigners reduced liquidity on the sales side and demand from individual investors began to increase prices at a slow pace on the local side. Expanding returns above 7% in the 2025-26 region declined, while foreign demand for nonfinancial corporate assets was stronger and the best performance was recorded in these stocks. Demand from individual domestic investors for long-term subordinated securities was the factor that drove prices in this segment.

“Broken trust in Turkey” Foreigners who came expecting some funds!

COMMENT: Weekend hit to TL

IIF kept the estimate of the “fair value” of USD / TL at 7.50.

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