The 2024 Treasury Financing Program published

The Ministry of Treasury and Finance plans to provide debt service in the amount of 2 trillion 213.2 billion liras next year, of which approximately 1 trillion 166.3 billion liras are capital and 1 trillion 46, 9 billion lire is interest.

The “Treasury Financing Program” was published on the website of the Ministry of Treasury and Finance, which includes the evolution for 2023 and predictions for 2024.

According to the program prepared on the basis of the Medium Term Program and the predictions of the Central Government Budget, the average maturity of domestic cash debt, which was 70 months last year, became 65 months in the period January- October of this year. The average cost of domestic fixed income borrowing denominated in Turkish lira, which was 16.3 percent, was 18 percent in the same period.

In 2023, the issuance of lease certificates continued, which were carried out for the first time in 2012 in order to expand the investor base and diversify debt instruments. In this context, a total of 107.4 billion lira of lease certificates denominated in Turkish lira were issued in the domestic market during the said period.

GREEN BONDS WERE ISSUED FOR THE FIRST TIME

This year, in the January-October period, a total of 136.3 billion lira in bonds indexed to the Turkish lira overnight reference rate (TLREF) were issued.

The $2.5 billion seven-year green bond issuance in April is the first environmental, social and governance bond issued by the country’s treasury in international capital markets. Financing provided through the issuance of green bonds will be used to finance/refinance green projects that meet the eligibility criteria.

DEBT SERVICE OF 2 TRILLION 213.2 BILLION LIRA

According to the program projections for 2024, debt service worth 2 trillion 213.2 billion liras will be carried out, of which approximately 1 trillion 166.3 billion liras are capital and 1 trillion 46.9 billion million liras are interest, 1 trillion 565.2 billion liras of which is the internal debt, it is planned to spend 648 billion liras on servicing the external debt.

It is expected that 1 trillion lira 262.2 billion of the domestic debt service will consist of payments to the market, and 303 billion lira will consist of payments for sales made through non-competitive tenders to public institutions.

The total interest-free cash balance, privatization proceeds, 2B sales proceeds, resources to be transferred from the Savings Deposit Insurance Fund, transferable and guaranteed debt returns, and non-borrowed resources that will be obtained as a result of cash/bank transfers. Usage is expected to be -281 billion lira.

Next year it is planned to finance 10 billion dollars through the issuance of bonds and lease certificates in international capital markets. According to these predictions, in 2024 a domestic debt of 2 trillion 136.4 billion lira is expected.

DOMESTIC DEBT OF 1 TRILLION 565.2 BILLION LIRAS

According to predictions, it is expected to have an internal debt of 1 trillion 565.2 billion lira and an external debt of 648 billion lira in 2024.

It aims to borrow primarily in Turkish lira and issue in international markets in currencies other than the US dollar to ensure market diversification.

To ensure optimal management of interest expenses, it is planned to maintain at a certain level the proportion of bills whose interest will be renewed in the next 12 months and those whose maturity is less than 12 months, taking into account the corresponding combination of instrument and expiration. A strong cash reserve is provided to reduce liquidity risk that may arise in cash debt management.

INDICATOR BOND ISSUES WILL CONTINUE

According to the program, the issuance of fixed coupon “benchmark bonds” in Turkish lira is expected to continue periodically within the framework of market conditions.

Depending on the repayment schedule and market conditions, bills and bonds with and without coupon in Turkish lira, variable coupon bonds with different maturities, inflation-indexed bonds, gold bonds and lease certificates based in gold.

The issuance of lease certificates denominated in Turkish lira is expected to continue in 2024. Additional demands from market participants may be assessed separately.

To eliminate the time lag that may be observed between monthly cash inflows and outflows, short-term Treasury Bills and financing instruments included in the “Regulation on Financing to be Provided through Money Market Cash Transactions” may be used.

To ensure a balanced distribution of debt service between periods and increase the efficiency of prices in the secondary market, swap and repurchase auctions may be held within the framework of market conditions, and the details of the auctions will be announced at the public at least once. business day prior to the day of the auction.

To obtain financing from international capital markets, conventional bonds, lease certificates, green bonds, social bonds and/or sustainable bonds can be issued with various maturities depending on market conditions. (AA)