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"Turkish bonds are once again back on the Swiss menu, and seem to be flavour of the month as well. Both Credit Suisse and UBS have returned to heavy activity in the Turkish bonds market this year, after disappearing in the downturn.
Zurich-based Credit Suisse has arranged $542.7 million of bond this year, after underwriting no deals in 2008 and 2009 and UBS -- also based in Zurich -- has underwritten $666.7 million of debt so far in 2010 after a year of no activity.
According to Bloomberg data, the issuance of Turkish bonds has doubled this year compared to last year, to a total of $7.5 billion so far. Credit Suisse and UBS are backing bonds by the Turkish government and companies like Lider Faktoring, and competing for clients against companies led by JPMorgan Chase.
“Turkey’s growth dynamics and robust economy has captured the interest of international investors,” said Gaurav Arora, a London-based debt capital markets banker responsible for Turkey with BNP Paribas. The lender has underwritten $763.6 million in Turkey over the past decade. “We see this trend continuing with more and more issuers accessing debt capital markets.”
The impressive economic performance has led to a massive increase in investment in Turkey, with net portfolio holdings increasing by $10.8 billion in the first seven months of this year, compared to last year's $873 million decrease (withdrawals), current account data shows.
With things like Moody's upgrading their rating on Turkish credit from stable to positive, and the IMF increasing its growth forecast for the Turkish economy this year from 5.2% to 7.4%, investors' confidence in Turkey is soaring, so much so that yields on Turkish 2 year lira bonds fell to 7.84 percent this week -- the lowest since October 2004.
This confidence is also leading to increasing investment in Turkish property according to Aydin Cakir, director of New Home in Turkey, he said:
"Confidence seems to be a really big thing at the moment. We have Turkey as one of the fastest growing economies in the world, up there with China in the first half of this year, but it is rising confidence in the government and the country's continually impressive fiscal performance that is really increasing sales of Turkish property.
"After all the money lost on properties during the credit crunch confidence is more important than ever when purchasing property overseas, and with each passing positive piece of news, confidence in Turkey increases."
