Borrowing costs and risk premium indicators continue to decline

Expectations that global recession concerns might limit interest rate hikes by major central banks, the decline in commodity prices, and the flow of funds from Russia to Turkey, while Turkey’s 5-year CDS indicator continued its downward trend, while borrowing costs declined.

The Ministry of Treasury and Finance went to borrow 17 billion 160.9 million lira in the bond auction held today. The compound interest rate in the auction was 17.51 ​​percent, which was 200 basis points below the previous borrowing cost.

Decrease in borrowing costs; It came after the increase in the Central Bank of the Republic of Turkey (CBRT) reserves. In the week ending July 29, the CBRT’s reserves rose to 101 billion 263 million dollars with an increase of 2 billion 940 million dollars compared to the previous week.

Analysts pointed to the news that the Russian State Atomic Energy Agency (ROSATOM) has started to transfer $15 billion of its spending for the completion of the Akkuyu Nuclear Power Plant (NGS) to Turkey. states that it may exceed billions of dollars.

Following these developments, Turkey’s 5-year CDS value, which rose to 898 basis points on 14 July, continued its downward trend and fell to 731 basis points. Thus, the CDS value fell by 167 basis points since its peak on 14 July, to its lowest level in 9 weeks.

Long-term benchmark bond yield at lowest level since March 2021

Turkey’s long-term benchmark bond yield, which started to decline from its historical peak of 28.56 percent in March 2022 and started at 17.82 percent in August, dropped to the lowest level since March 2021 with 16.94 percent today.

Analysts said that the recession concerns and expectations that leading central banks might limit interest rate hikes and the decline in commodity prices brought about a decline in CDSs globally.

Analysts stated that the opening of the grain corridor in Turkey and the developments in the trade relations between Russia and Turkey also supported the decrease in the risk premium, and stated that the positive atmosphere in the markets could continue with the global risk appetite, falling costs and increasing reserves.

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