Bond market movements, auction sizes

Opinions on the Fed's range have been frequently voiced in recent days, and a terminal interest rate forecast has been tried to be revealed. In the Summary of Economic Projections of the December FOMC meeting to illustrate this, we'll likely be seeing higher-level spots than in September. Powell's statements and some current data, especially employment, reveal the possibility of higher final rates from the September meeting and higher than currently thought. The Fed will reduce the current pace of rate hikes as it approaches restrictive rate levels enough to curb inflation. In this regard, December and beyond are pointed out, and there is a common belief that we will see a 50 bps rate increase at the December FOMC meeting.

In the bond market, the fact that the 10-year yields did not move much shows that the effect of rate hikes is not new news. The recession story, which was handled together with the stagflation scenario, has largely been transferred to 2023. CEOs' thoughts reveal that hiring plans will slow down due to uncertain economic and financial conditions.

On the Asian side, JGB yields continued to hover around 0.25% after one of the BOJ members raised the possibility of a monetary policy review. In the Chinese economy, which has narrowed its range of action with the closures, it is planned to switch to a life plan with Covid, to increase economic activity with openings in this context, and to maintain a supportive financial stance with RRR discounts.

If we look at Turkish assets; While the latest data released in the US showed that the economic activity continued, it increased the expectations that the Fed has not achieved the desired result in rate hikes so far. While Turkey's dollar-denominated bonds fell, credit default swaps rose on the back of declining risk appetite. USD/TRY is trading sideways at 18.6395. Turkey's 5-year CDS rose to 529 basis points, while the 10-year dollar-denominated bond yield was 8.8%.

The Ministry of Treasury and Finance sold 1.5 billion TL to the public and 11 billion TL to market makers in bonds with a maturity of 5 years and fixed coupon payments every 6 months. The compound interest rate in the 5-year bond auction was 10.52%. In the tender for government bonds with 7-year maturity, variable interest rate, and coupon payment every 6 months, net sales of 3.04 billion TL were made against the 5.35 billion TL bid. The periodic interest rate in this auction was 10.11%.

In a statement, the Turkish Treasury confirmed that $2 billion worth of bonds were sold in the reissue of the January 2028 maturity dollar bond. The coupon rate of the January 2028 bond is 9.875%, and its return to the investor is 9%. The total size of the January 2028 bond reached $3.5 billion. The issuance attracted more than 2.5 times the tender size from approximately 150 accounts, with 55% sold to Middle Eastern investors, 22% to UK investors, and 13% to US investors. Thus, the amount of funds obtained from international capital markets in 2022 reaches 11 billion dollars.

·        According to the Capital Markets Board's announcement on December 2, Eximbank has received legal approval to sell bonds of up to $1 billion outside of Turkey.

·        Vestel Elektronik received approval for bond sales up to TL 1.5 billion.

·        Turkcell Finansman received approval for bond sales up to TL 1 billion.

·        Nurol İnşaat was approved to sell bonds up to TL 1 billion.

·        İş Faktoring received approval for bond sales up to TL 1.96 billion.

·        Fiyatlar indikatiftir. Alım / Satım sırasında piyasa koşullarına göre değişebilir.

·        Prices are indicative. It may change according to market conditions during Buying / Selling.

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Hibya Haber Ajansı