Turkish banks issue around USD4.6B in subordinated debt in 2023
Date
6/13/2024 9:58:13 AM
(MENAFN) Last year, Turkish banks issued around USD4.6 billion in subordinated debt, contributing to a decrease in risks associated with external financing, according to Ahmet Kilinc, director for banks at the US-based credit rating agency Fitch. Speaking to a Turkish news agency, Kilinc noted that Türkiye’s credit rating outlook, along with the ratings of many Turkish banks, had improved. This positive shift came as banks regained access to external financing following last year’s presidential election.
Kilinc observed a resurgence of investor interest in the Turkish banking sector, not only from major banks but also from smaller institutions. This renewed interest suggests a growing appetite for Turkish financial assets, and Kilinc emphasized that Turkish banks should take advantage of these opportunities. He pointed out that the banks are currently not facing an urgent need for additional capital or foreign currency liquidity, positioning them well for strategic financial moves.
However, Kilinc also highlighted a potential challenge: the rapid issuance of subordinated bonds has led to an excess supply, which might continue in the short term. Despite this, he remains optimistic that banks will seek out and capitalize on favorable opportunities. The newly issued subordinated bonds have been instrumental in bolstering the capital ratios of banks, providing a hedge against potential exchange rate fluctuations. Although profitability might see some decline, these bonds continue to strengthen the overall capital structure of the banks.
Kilinc further discussed the shift in the use of swaps by Turkish banks. Swaps with Türkiye’s Central Bank (TCMB) have significantly decreased from USD58 billion to USD18 billion, while swaps with foreign banks have seen an increase. He speculated on the possibility of the TCMB adjusting swap limits, which could result in a greater focus on swaps with foreign banks. This shift could provide Turkish banks with more flexibility and access to foreign currency liquidity.
Overall, Kilinc’s insights highlight a period of strategic adjustment and opportunity for Turkish banks, as they navigate the evolving financial landscape with improved ratings and investor confidence.
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