Turkey Country Report Oct21 - October, 2021

October 6, 2021

President Recep Tayyip Erdogan did it again. On September 23, Turkey shocked with a 100bp rate cut. More cuts are awaited despite booming (even official) inflation and global inflationary period.

As a result, the record-destroyer lira is back. USD/TRY: Latest record - 8.9607 on September 29.

Turkey’s 5-year credit default swaps (CDS), meanwhile, jumped above the 400-level.

The magnitude of the currency depreciation will be the main focus in the coming period, while it is fair to conclude that Turkey is entering into a full-blown course of hyperinflation. Booming global inflation coupled with lira depreciation will multiply Turkey’s real inflation, thought to already be hovering in the 40-50% range at least versus the official inflation at the 19%s, among the highest in the world.

The noise in foreign policy is just because Erdogan is too sick and he has totally lost sight of reality. He reacts emotionally and the mainstream media acts like kids mocking a menthally ill person via headlining Erdogan’s emotional reactions as serious policy moves. At the end of the day, the Erdogan regime is in partnership with the Biden administration in the Afghanistan business and it will retreat from some more ground in Idlib region of Syria in line with the Kremlin’s demands, though the Kremlin side of foreign relations does not actually make much sense compared to the relations with the US (See 2.4 for some more details).

Erdogan on September 8 cut to zero the import customs duty for wheat, rye, barley, oats and maize, chickpeas and lentils until year-end. Import duties were also reduced for coffee from the European Union countries to 6% from 11%. Wheat and barley import tenders continued while prices have been booming.

The Treasury, Vakifbank and Kuveyt Turk sold eurobonds. Global Liman completed the early redemption of its $250mn of eurobonds due November.

The autumn 'refi' season for Turkish banks kicked off on September 8 as Akbank (AKBNK) “entered the syndicated loans market” to refinance its October 2020 deal. Turkish banks conduct 367-day—a ‘trick’ maturity for registering loans as long-term by using two extra days—syndicated loan renewal seasons twice a year, with one season in spring (April-May) and the other in autumn (October-November).

Akbank always sets the benchmark for the interest rates. Its costs in the upcoming deal are awaited, while the rollover rates will be watched in the subsequent deals. Following the latest “revision” in external debt metrics, syndicated loan renewal rates remain the only option to have an idea on Turkey’s foreign loan renewal rates.

TEB (Turk Ekonomi Bankasi), French lender BNP Paribas’ mid-size Turkish unit, was also in the market. In the autumn season, nine Turkish banks will renew a total of around $6bn worth of syndicated loan facilities in October and November (See list below under Section 5.4).

Demiroren Holding is in talks to restructure $1.5bn worth of loans. Gama Enerji agreed a restructuring deal for a $595mn loan, which was already restructured a few times before.


The number of shopping malls in Turkey reached 441 with 14mn m2 leasable space from 433 with 13.5mn space prior to the pandemic last year.

Steel and iron prices have lately been falling. Is the steel boom over?

Turkey’s gaming startups remain hot favourites.

Germany’s Delivery Hero (DAX/DHER) and its Turkish unit Yemeksepeti launched a new tech hub in Istanbul.

Turkey’s LNG imports dropped 41% y/y in H1 due to record high prices. Botas is reportedly negotiating an about annual 4bn m3 gas contract with Russia while Azerbaijan confirmed a new “temporary contract” with Turkey. Botas will also buy about 20 cargoes of LNG for winter. Russia shaked the European gas market to blackmail for the completion of the Nord Stream 2 pipeline. Gas prices are booming amid shortages in Turkey’s drought-hit hydropower plants. Turkey’s lakes and rivers are drying up.

Chip crisis is hitting Turkey’s automotive industry.

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