JPMorgan: Turkey’s external borrowing could reach a record high in 2024

JPMorgan

Stefan Weiler, JPMorgan’s head of debt capital markets for Central Europe, the Middle East and Africa, said Turkey’s return to orthodox fiscal policy could see record borrowing from overseas markets in 2024 and foreign investors continue to return to Turkish assets.

“From our perspective, we see Turkey as one of the potential big stories of next year,” Weiler told Reuters, adding that he thought the amount of bonds and bills issued by the government and companies next year could easily exceed $25 billion.

The government is expected to borrow about $10 billion from overseas markets in 2024, matching this year’s figure. Weiler said he expected a “significant increase” in borrowing by cash-starved companies and banks.

“As long as global market conditions remain constructive and some of the changes made are not reversed, Turkey could record its busiest year ever in terms of international capital market issuance activity,” Weiler said.

Weiler added that despite Erdogan’s tendency in past years to abruptly dismiss central bank governors and reverse policy, they do not expect the country to backtrack from the recent change in fiscal policy.

“Foreign capital has already started to come back and the mood seems to have changed for Turkey,” Weiler said.

“I would be quite surprised if this situation reverses and I think the upcoming local elections will further crystallize Turkey’s trajectory,” Weiler said, referring to the local elections on March 31.

Weiler said JPMorgan expects a global increase in the amount of FX-denominated borrowing by developing countries next year, adding that the total level will not approach historical peaks as China’s borrowing has decreased.

Source: BloombergHT

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