Rise in defaults in the corporate bond market and CBRT's credit exemption move

In the corporate bond market, where financing costs have risen due to the impact of tight monetary policy and macroprudential measures, default cases have increased following a funding crisis. The Central Bank of the Republic of Turkey (CBRT) has decided to exempt TL loans to be used by non-bank private sector entities for bond redemptions from the credit growth limit in order to alleviate payment difficulties in the market.

According to CBRT data, as of October 16, the domestic bond issuance volume of non-general government sectors stands at 992.8 billion liras. This figure, which was 1 trillion 71 billion liras before the funding crisis, reveals the contraction in the market. The total issuance stock of non-bank institutions was recorded at 706.2 billion liras.

Last week, Tarfin Tarım, Alnus Yatırım, Alves Kablo, and Fikret Petrol defaulted by failing to make their bond payments. The bond payment of Ata Varlık Kiralama, with Fikret Petrol as the user, could also not be made. Previously, Tera Yatırım Bankası and Hedef Holding had also experienced payment difficulties. Abroad, Zorlu Enerji requested a restructuring for its eurobond payment due on October 23.

Since September 15, foreign investors' sales in private sector bonds have exceeded $1.3 billion, reducing their stocks to $3 billion 39 million. Assessment: Experts state that no problems are expected in the bonds of large companies, but banks may remain cautious about providing loans to companies in distress.