Azernews.Az

By Bloomberg

Societe Generale says demand for Turkish debt is increasing as depressed interest rates in Europe and advances in securitization outweigh a rout in the lira.

Since September the bank has sold over $1 billion in short- term paper directly to Asian investors and is looking to tap appetite in the U.S., according to Stephane Hild, who spoke in an interview in Istanbul on Monday. That’s coinciding with a push by Turkish banks to issue asset-backed securities that give investors added protection on their exposure to the market.

While concern about the outcome of June parliamentary elections and a potential rate increase by the U.S. have pushed Turkey’s currency to record lows, there are no signs that banks will have any difficulties borrowing, Hild said. The Turkish lira dropped 14 percent against the dollar this year, the most among 31 major world currencies. Yields on two-year lira notes are up 187 basis points to 9.89 percent.

“There’s some risk in Turkish paper, but when you look at what you can get today elsewhere, it’s crazy,” said the CEO, mentioning negative interest rates in France and Switzerland. “We’re quite involved in financing Turkish banks and every syndicated loan we participate in, there’s more and more demand. There is a risk that liquidity might dry up, but today I see no signs of it.”

Turkey’s two biggest traded banks have secured capital markets board permission to issue 1 billion euros of covered bonds, taking advantage of developments in securities legislation that were praised by Moody’s Investors Service. The bonds are guaranteed by specific cash flows and can provide added security to jittery investors, Hild said.

Hulya Kefeli, executive vice president in Akbank’s international division, said the bank hired Societe Generale and UniCredit SpA as dealers of the five year bonds, which are backed by mortgage loans. Barclays Plc, HSBC Holdings Plc and Natixis SA are arrangers.