https://ahvalnews.com-Turkey is planning its first sale of international bonds since a collapse in the lira late last year.
Preparations for the debt issuance come as Treasury and Finance Minister Nureddin Nebati meets with investors in London on Tuesday to explain the government’s economic programme.
The Turkish government has hired banks including HSBC to manage a sale of Islamic sukuk bonds, which may happen this month, Bloomberg reported on Monday citing people that it did not identify. The proceeds from the bond issue could be used to refinance about $2 billion of debt maturing in February, it said.
Turkey last sold foreign bonds in September, just before President Recep Tayyip Erdoğan ordered the central bank to cut interest rates despite accelerating inflation. The rate reductions sparked a sell-off in the lira – the currency lost 44 percent of its value last year. Inflation surged to 48.7 percent in January, the highest level in two decades.
Nebati will meet with investors in the British capital at 10 a.m. and 2:30 p.m. local time, according to the Turkish media. The visit comes after he said in an interview with Nikkei last week that there would no going back on Turkey’s low interest rate policy.
There “seems to be huge interest in finance minister Nebati’s trip”, said Tim Ash, senior emerging markets strategist at BlueBay Asset Management in London. Foreign investors have been highly critical of the government’s interference in central bank policy.
The central bank cut its benchmark interest rate to 14 percent from 19 percent in the final four months of 2021. In late December, Erdoğan announced a new bank deposit scheme that allows Turks to link their savings to the value of the dollar to help reverse the lira’s declines.
Nebati will travel with Erdoğan to the United Arab Emirates following the London visit. The minister will then fly to Indonesia to attend a G-20 meeting of finance ministers and central bank governors.
The lira was trading down 0.3 percent at 13.64 per dollar on Tuesday. It hit a record low of 18.36 per dollar on Dec. 20, just prior to Erdoğan’s announcement of the deposit scheme, which has attracted 281 billion liras ($20.6 billion) of investment as of Feb. 2, mostly from traditional lira deposit accounts. The lira has also rallied after the central bank intervened in the currency markets to sell dollars. The bank’s foreign exchange sales totalled almost $20 billion last month.