As Turkey gets to grips with hefty economic policy challenges – and shrugs off the complications of living in a volatile region – it exudes a self-belief hard to find elsewhere.
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In an exclusive interview with IFR, Mehmet Simsek, Turkey’s Finance Minister, talks frankly about the issues his country faces.
The sovereign has relieved the funding pressure with a flurry of issuance following a challenging 2011.
The Greek effect – Turkey’s unprecedented stability has turned it into a magnet for investors – but it is in a rough neighbourhood and political risk is likely to creep up the agenda this year.
Turkish banks were the envy of many of their foreign counterparts when the financial crisis squeezed hardest. Their more conservative approach to the business than many banks elsewhere was reflected in their balance sheets. It is early days, but now the banks are utilising their strength to expand beyond borders, and ambitions are global.
Relative to the size of its economy, Turkey’s equity market has consistently failed to deliver on its potential. But after 2011 which was the definition of a false dawn, could that finally be about to change?
Sekerbank’s pioneering efforts in launching a covered bond in July last year has set a precedent for others to follow and although progress is being made, there are still some obstacles to overcome.
Turkish issuers’ reluctance in issuing sukuk will not disappear in the immediate future, but as politicians and businesspeople are laying the groundwork to facilitate issuance, there is hope that obstacles will be overcome.
International lenders’ confidence in syndicated loan opportunities throughout Turkey’s telecoms, financial and infrastructure sectors is clearly reflected in the US$6.5bn-plus worth of volume circulating the market.
Deleveraging is forcing global banks to think the unthinkable about their positions in one of the world’s most attractive banking markets.
As a country that has seen frequent currency devaluations over time, Turkey has long had a thriving derivatives business, unsurprisingly revolving around FX and rates. But today’s investor has different concerns with capital protected products on the rise.
Sometimes it pays to be different. That is certainly the belief of the Turkish central bank, which hopes its unorthodox and controversial monetary policy regime is starting to reap rewards.