Turkish Bonds Rally as Opposition Nears Deal on Candidate

Turkey’s eurobonds rallied and credit default swaps fell after Bloomberg reported that the opposition is looking to tap two popular mayors as vice presidents.

(Bloomberg) — Turkey’s eurobonds rallied and credit default swaps fell after Bloomberg reported that the opposition is looking to tap two popular mayors as vice presidents.

The dollar bond due May 2047 jumped almost 2 cents on the dollar to its highest in more than a month, with yields falling below 9%, according to data compiled by Bloomberg. The note due Sept. 2033 added 1.2 cents, also to a one-month high. The cost of insuring Turkish debt against default over the next five years fell to the lowest since Feb. 6.

Ankara Mayor Mansur Yavas and Istanbul Mayor Ekrem Imamoglu could be endorsed as deputies to Kemal Kilicdaroglu — the leader of the Republican People’s Party — to break an impasse within the opposition over a joint candidate in May’s election, Bloomberg reported, citing people familiar with the matter. The dispute was hampering a rare chance to unseat the country’s longest-serving leader, President Recep Tayyip Erdogan.

Under the arrangement, Yavas and Imamoglu won’t have to resign from their mayoral duties before the elections, the people said, speaking on the condition of anonymity because the discussions aren’t public. 

“At least some market participants may anticipate that if the opposition comes to power, market-friendly reforms would be implemented to address structural issues, including chronically high inflation, which is a major burden on the Turkish economy” said Piotr Matys, a senior analyst at In Touch Capital Markets.

 

The benchmark Borsa Istanbul 100 stock index climbed as much as 4.1% to extend its gains to 20% from the post-quake dip.

“I don’t think anyone in financial markets reasonably want to see Erdogan running the show for another five years,” said Cristian Maggio, head of portfolio and ESG strategy at TD Securities in London. “But foreigners have been sidelined long ago and are not active contributors to market moves nowadays.”

Read: Turkish Opposition to Enlist Popular Mayors to Avert Collapse

Read: Turkey’s Iyi Party Reunites With Opposition Bloc After Spat

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