Turkish Fund Outflows Put Corporate Bond Financing Under Pressure
A sharp drop in fund portfolios is raising concerns about bond demand and financing access for smaller Turkish companies.
Key takeaways
- The Turkish corporate bond market exceeded 1 trillion lira at the end of September.
- Investment funds hold about a third of outstanding corporate bonds.
- Tera Yatırım Bankası missed 6.05 billion lira in principal and coupon payments on October 5.
Investor withdrawals from Turkish funds are adding pressure to corporate bond financing, in a market worth more than 1 trillion lira at the end of September. Funds held about a third of outstanding corporate bonds, according to Ekonomim’s report citing Bloomberg.
After Tera Portföy and Pusula Portföy failed to meet investor redemption obligations last month, fund portfolio values fell by about 1.5 trillion lira, or $30.3 billion. Bloomberg reported that managers have been selling more liquid assets to meet withdrawals, while corporate bonds can be harder to sell.
That shift may leave funds less willing to buy new bonds, making it harder for companies to raise money. The risk is greater for smaller businesses, while large companies including Turkcell and Akbank have continued to borrow in the bond market.
About 35 billion lira of bonds issued by organizations linked to the fund turmoil remain in the market, Bloomberg reported. Tera Yatırım Bankası missed 6.05 billion lira in principal and coupon payments on October 5.
Separately, Tera Yatırım Menkul’s applications for 69 billion lira in debt issuance and capital increases were removed amid market uncertainty, according to Bloomberg. In funds liquidated over the past month, assets with limited liquidity accounted for 58.6% of portfolios, with a reported total value of about 334 billion lira.
This article was produced with the help of AI technology. Based on reporting by the outlets listed above.
