Turkish Treasury to issue new bonds; consumer loan limits set

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Turkey’s Treasury said on Thursday it will issue state enterprise income-indexed domestic bonds to encourage Turks to make savings in lira assets, while the banking watchdog announced maturity limits for consumer loans, Reuters reported.

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

After that initial statement, the lira firmed as far as 16.8 against the dollar, before easing to 17.2 by the end of trading.

The lira has slid 23 percent this year in addition to last year’s 44% tumble in value, which was precipitated by a series of unorthodox central bank rate cuts, carried out under pressure from President Recep Tayyip Erdoğan despite surging inflation.

The Treasury said the new domestic debt instruments would have a minimum yield guarantee in coupon payments. The bonds are indexed to the revenues of some state economic enterprises.

The Treasury statement earlier had stressed Turkey’s status as a free market economy.

“Unfortunately some circles take all opportunities to question recklessly Turkey’s status as a free-market economy with a liberal foreign exchange regime,” it said.

That statement came after credit rating firm S&P Global said on Wednesday there was a rising risk that Turkey could introduce additional capital controls if the pressure on its currency and financial markets continues to intensify.

Among other measures, Turkey’s BDDK banking watchdog said it decided to set a maximum 24-month maturity for consumer loans between 50,000 and 100,000 lira and a maximum 12-month maturity for consumer loans over 100,000 lira ($5,814).

Separately, the Turkish capital markets board said it had reduced its fees in order to encourage foreign funding for public offerings held in Turkey and to encourage companies to obtain funds by issuing capital market instruments abroad.

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