Morgan's ambitious risk premium target for Türkiye

Morgan Stanley reiterated its risk premium recommendation in its assessment of Turkey's Eurobond issuance. The institution gave a sell recommendation with an entry level of 262 for Turkey's five-year risk premium, while setting the target level as 217. If Morgan Stanley's expectations come true, it will be the lowest level since 2018. As Turkey prepares for its third foreign borrowing of the year, Morgan Stanley's previous recommendation and target regarding Turkey's risk premium also drew attention in its note regarding borrowing. In the note prepared by Morgan Stanley Strategist Neville Z. Mandiminka, the yield expectation for Turkey's 8-year Eurobond issuance was estimated in the region of 7.23-7.30 percent due to the impact of potential strong demand supported by the technical and fundamental outlook. In the note, the shelving of wage increases in June, the decline in annual inflation in June inflation that exceeded expectations, exit from the grey list and Moody's possible rating increase were listed as prominent elements in the fundamental outlook. The note showed that the institution gave a sell recommendation on Turkey's 5-year risk premium. Accordingly, the institution gave a 262 entry level and 300 stop loss recommendation and a 217 target for Turkey's risk premium. Turkey's CDS is currently at 261. If the institution achieves this target, Turkey's risk premium will have reached its lowest level since 2018. The risk premium had fallen below 170 basis points in the first quarter of 2018. Turkey is preparing for its third dollar borrowing of the year The Ministry of Treasury and Finance authorized BNP Paribas, Citi, JP Morgan and Standard Chartered for the 2032-term Eurobond issuance. According to information Bloomberg received from sources, the initial yield expectation for the 8-year term Eurobond issuance was around 7.625 percent.