Excess TRY liquidity in the system has, once again been increasing recently, bringing back expectations of more macro prudential measures. We may hear from the CBRT in next week's meeting.
There will be three TURKGB auctions next week, with the Treasury reissuing a 5-year fixed rate, 5-year CPI linker together with the first issue of a new 2-year fixed rate benchmark bond. The Treasury will also conduct three direct sales to banks, including two sukuks and a gold-based bond.
The Turkish Treasury issued its much anticipated new 10-year USD-denominated bond, which has been trading with a premium since then. The successful issue also helped Turkiye's CDS fall below the 300bp threshold.
Despite the surge in UST yields after the release of US CPI data, Turkiye's spreads tightened to almost December 2023 levels. While we are not pessimistic in any way about Turkish credit, this “outperformance” may not last heading into local elections in March and turn into a global rates chase instead.