The combination of stable government and an improving economy continues to keep Turkey on the right path. But as the country definitively emerges from the dynamics of crisis economics and with elections in the offing, what comes next? At the political and economic level, conditions remain benign. The recent spat over the choice of a new head for the central bank may have caused a few headlines, but the government remains generally sure-footed in its approach to political and economic policy. In

IIt has been some time coming, but it now seems pretty certain that 2006 will see the first domestic corporate bond issuance from Turkey for many years. The combination of lower government financing needs, falling interest rates and the equalisation of tax treatment has set the scene for the new issues. Seniz Yarcan, executive vice-president at Industrial Development Bank of Turkey (TSKB), is certainly expecting to see domestic corporate bonds launched this year. The bank has already arranged a

The Turkish financial institutional market has had another stellar year in syndicated lending. For top-tier banks this has brought down pricing on their one-year syndicated lines to 57.5bp all-in, while this year Akbank brought the first three-year loan for a top-level Turkish bank. "The market has moved from a one-year tenor in 2004 through series of one and two-year deals to a single-tranche three-year deal for Akbank in 2005," explained David Pepper, a director at WestLB. "This has been accom

For securitisation bankers, Turkey is one of the two most exciting prospects in the emerging EMEA region, the other being Russia. "The great thing about Turkey is that it's big, with a large population. That means that the market for plain vanilla loans suitable for ABS – autos, mortgages and credit cards – is huge," said Christopher Davis, co-head of banking and origination at Deutsche Bank. And for the monoline insurers, Turkey arguably has more potential than any other country in emerging EME

It is over one year after the Turkish currency reform and the international bond market has been through some significant changes. The buoyant start to 2005 soon slowed after the currency strengthened and the EU convergence story ran out of steam, but in Q1 2006 the market appears to have got going again at more sustainable volumes. The first of Europe's frequent borrowers embraced the Turkish lira as a desirable currency for bond issuance in January 2005 after six zeros had been slashed from th

Spread convergence accelerated through 2005 and early 2006, and despite the now traditional March correction, investors continued the strategy of swiftly buying into emerging market sell-offs. A much improved economic record led by falling interest rates and hefty primary budget surpluses has specifically supported Turkish assets, as did the start of EU accession talks last October after a long struggle. But while high beta Turkey did manage to outperform most of the EEMEA pack (notably Russia),

After a period of sustained demand for domestic government bonds, the market is vulnerable to any shift in sentiment that might 0undermine EM currencies. March trading showed local markets as well as lower-rated Eurobonds retreating smartly as carry trades were unwound. Raphael Kassin, head of EM fixed-income at ABN AMRO Asset Management, stressed that timing here is crucial. "Basically you will make money out of Turkey until (and if) things go wrong. There has been something of a gold rush sinc

Equity capital market deal volumes in Turkey doubled between 2004 and 2005, but investors were not offered many more opportunities to invest. In 2004 the total issuance through IPOs, follow-ons and accelerated bookbuilds came to US$1.03bn. That figure rose to US$2.16bn last year, according to figures from Thomson Financial. However the increase was accounted for by the privatisation IPO of Vakifbank in November, and included in these volumes is the IPO of Akmerkez, an IPO effectively closed to m

Turkish banks seem to be dressing themselves up for sale. That is certainly one explanation for the hurry to expand balance sheets even at a high cost in terms of funding. Finansbank and Deniz Bank appointed advisers, JPMorgan in the case of Deniz Bank, and in early April National Bank of Greece announced it was buying a stake in Finansbank. There is also speculation that some of the bigger banks could also see at least partial sales. When Akbank sold out of its participation in development bank

Turkey is now in its fourth year of one-party, majority government and strong GDP growth. This is no accident. Almost all observers recognise the link between the AK Party's majority rule and the country's recovery from the crisis of 2001. During that time, the party – contrary to the initial fears of many – has maintained strong fiscal discipline, worked to bring down inflation, allowed the central bank to control rates, and encouraged strong GDP growth that has seen the size of the economy inc