Turkey’s central bank asked some local lenders this week to step in and buy the country’s dollar bonds, which have fallen since the first round of the presidential elections, according to people familiar with the matter.
(Bloomberg) — Turkey’s central bank asked some local lenders this week to step in and buy the country’s dollar bonds, which have fallen since the first round of the presidential elections, according to people familiar with the matter.
Some of the country’s banks were called by officials on Monday and asked to buy the nation’s dollar bonds across multiple maturities in secondary markets, the people said asking not to be named as they are not authorized to speak publicly on the matter.
The move, the people said, was aimed at keeping borrowing costs stable and also prevent a spike in credit-default swaps — a measure of protection against potential credit events, such as default. The lenders were not given purchase targets.
The central bank declined to comment.
Read more: Turkey’s Erdogan Wins Support of Eliminated Rival in Runoff
Turkey’s five-year credit default swaps dropped as much as 20 basis points to 669 basis points on Wednesday, the biggest drop since May 12, after surging above 700 basis points on Monday.
The yield on 10-year generic dollar bond dropped more than 35 basis points to 10% over the past two days after hitting the highest level since October. In the currency markets, the lira was trading 0.3% lower at 19.90 per dollar as of 8:43 p.m. in local time.
Read more: Bets Against Turkish Lira Hit Record With Controls Under Strain
Turkish assets have come under renewed pressure after the May 14 vote as bets on a quick end to President Recep Tayyip Erodogan’s presidency unraveled. Erdogan will face opposition candidate Kemal Kilicdaroglu in a runoff vote on Sunday.
–With assistance from Srinivasan Sivabalan.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.