The Turkish Treasury will issue new bonds; consumer loan limits set

A woman holds Turkish lira banknotes in this illustration taken May 30, 2022. REUTERS/Dado Ruvic

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ISTANBUL, June 9 (Reuters) – Turkey’s Treasury said on Thursday it would issue national bonds indexed to the earnings of state-owned companies to encourage Turks to save in lira, while the banking watchdog announced limits on maturity for consumer loans.

The announcements came after the Treasury said in a statement that a series of new “solutions-oriented measures” would be announced on Thursday evening for an economy beleaguered by soaring inflation and a falling lira.

After this initial statement, the lira strengthened to 16.8 against the dollar, before falling back to 17.2 by the end of the session.

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The lira has fallen 23% this year, on top of the 44% plunge in its value last year, which was precipitated by a series of unorthodox central bank rate cuts, carried out under pressure from the president Tayyip Erdogan despite soaring inflation.

The Treasury said the new domestic debt instruments would have a guaranteed minimum return in coupon payments. The bonds are indexed to the income of certain state economic enterprises.

The Treasury statement had previously underlined Turkey’s status as a free market economy.

“Unfortunately, some circles are seizing every opportunity to recklessly question Turkey’s status as a free market economy with a liberal exchange rate regime,” he said.

The statement came after credit rating firm S&P Global said on Wednesday there was a growing risk that Turkey could introduce additional capital controls if pressure on its currency and financial markets continues to escalate. . Read more

Among other measures, Turkish banking watchdog BDDK said it decided to set a maximum maturity of 24 months for consumer loans between 50,000 and 100,000 liras and a maximum maturity of 12 months for consumer loans. above 100,000 lire ($5,814).

Separately, the Turkish Capital Markets Board said it had lowered its fees to encourage foreign financing for public offerings held in Turkey and to encourage companies to raise funds by issuing capital market instruments. capital abroad.

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Reporting by Ezgi Erkoyun and Daren Butler; Editing by Richard Pullin

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