- In the bond-bill market, the compound interest of the 2-year benchmark bond is 9.95 percent, the lowest level since November 2016, due to the new loan regulation made by the Banking Regulation and Supervision Agency (BRSA) over the weekend and the expectation that the Central Bank will continue to reduce interest rates. It decreased to .
- The new loan regulation made by BRSA to alleviate the economic effects of the new type of coronavirus (Covid-19) epidemic and to ensure more efficient use of banks’ resources and the Central Bank of the Republic of Turkey (CBRT) will be announced at the Monetary Policy Committee (PPK) meeting to be held on April 22. The expectation of a discount brought the compound interest rate of the 2-year benchmark bond to its lowest level in approximately the last 4 years.
- The compound interest of the 2-year benchmark bond, which was in a downward trend in January, dropped to single digits after a long break in February, but quickly rose to 12 percent in parallel with the uncertainties caused by the Covid-19 epidemic.
- The compound interest of the 2-year benchmark bond, which reached the highest level since November 2019 with 12.71 percent in April, decreased to 9.95 percent with the BRSA decisions and expectations that the Central Bank will reduce interest rates.
- “It is very important that loans spread to the base and reach SMEs”
- Istanbul University Faculty Member Prof. Dr. Sefer Şener, in his evaluation of the issue to the AA correspondent, said that after the BRSA’s decision regarding the active ratio, banks turned to bond purchases to maintain this ratio until May 1, thus a decline of more than 200 basis points in bond interest rates occurred.
- Stating that the gap between the policy rate and market rates was minimized with the BRSA’s decision, Şener stated that the expectation of the CBRT to reduce the interest rate at the policy rate meeting to be held on Wednesday was also effective in this decline in bond interest rates.
- Şener pointed out that banks have to meet this rate every month, otherwise they will have to pay penalties, and said, “Since these penalties will be covered by the capitalists in private banks, banks strive to avoid being penalized.” he said.
- Noting that BRSA also increased the foreign exchange deposit coefficient to 1.25 percent, Şener stated that the aim is to bring at least some of the foreign currency assets of private deposit banks abroad to Turkey and contribute to the swap system or bond purchases.
- Şener said:
- “In the next period, it is very important for loans to spread to the base and reach SMEs. The distribution ratio of commercial, SME loans and corporate loans in new loans is of great importance. If these loans reach SMEs, they will meet the expectations of the society. With this decision of the BRSA, the private sector “Deposit banks will be provided with more KGF loans and acceleration loans.”
- “The yield curve shifted downwards in all maturities”
- Ata Investment Director Cem Tözge also said that they observed that there is intense interest in bonds today, following the asset ratio decision announced by BRSA.
- Pointing out that banks, which must maintain their asset ratio by May 1, play an important role in the movement in the bond market, Tözge said, “While banks are making intensive purchases in the market to expand the Government Domestic Debt Securities (GDDS) portfolio, which is valued at 0.75 in the announced formulation, the yield curve is downwards in all maturities.” slipped.” said.
- Tözge made the following evaluations:
- “Especially, the decline in bond interest rates with a 1-2 year maturity is seen much more clearly (200-250 basis points). After this surprise move after the BRSA’s decision, banks will write serious profits from the securities portfolio item, and the decision taken will have doubts on the bank stocks.” “The possible negative effect of awakening has been balanced.”
- Source: https://www.aa.com.tr/tr/ekonomi/tahvil-faizi-tek-haneye-geriledi-/1811649
