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Bond Market News

Turkey’s Sovereign Wealth Fund Gives State Banks $2bn Capital Injection

February 10, 2022

Turkey’s sovereign wealth fund will inject around $2bn into two state-run lenders to beef up their balance sheets. This comes after the lira’s massive 44% depreciation in 2021, and 1.3% depreciation YTD. Halkbank said it would use the proceeds to extend loans to corporates. Vakifbank said it aims to boost its capital “against fluctuations that may occur in global market conditions and unpredictable asset deterioration” in addition to generating capacity for future growth. Turkiye Halk Bankasi AS and Turkiye Vakiflar Bankasi TAO announced capital increases via private placements raising TRY 13.4bn ($990mn) each through the wealth fund Turkiye Varlik Fonu (TWF). In 2019 and 2020, TWF injected $6.7bn to support state banks in two separate rounds.

Vakifbank’s 8% 2027s are currently trading at 100.42 yielding 7.37%.

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