The Treasury will pay 210,000 million debt in three months

High In trying to finance extraordinary budget deficits that have ballooned in an inflationary environment and due to the impact of earthquake spending, the Treasury is making large domestic debt payments at very high interest rates. The Ministry of Treasury and Finance plans to borrow 224.4 billion TL in new debt against a debt service of 210.6 billion TL in the period from November 2023 to January 2024. The renewal rate of the internal debt will be 116 percent in said three months. In other words, for every 1 TL of debt you will pay, you will borrow 1.16 TL. According to the domestic debt strategy announced by the Ministry, a total of 78 billion TL in November against a total domestic debt service of 78.4 billion TL, a total of 40 billion TL in December against a total domestic debt service of 39.4 billion TL, and a total of 92.8 billion TL will be spent in January, of which 126.4 billion TL will be spent on domestic loans to cover the service of the internal debt of .

HIGH DEMAND FROM THE GULF

Last week, the Treasury borrowed approximately 21 billion Turkish lira through auctions of benchmark bonds maturing in 2 and 10 years within the scope of the November borrowing strategy. This week approximately 40 billion lira were borrowed in 4 tenders. However, the Treasury borrows at high interest rates, above 42 percent, to obtain inflows of foreign resources and finance debt payments. Although it did not go unnoticed that 200 investors demanded triple the amount of the issue, almost half of the demand came from the Gulf countries. With this issuance, the total amount of loans from international capital markets in 2023 reached 10 billion dollars. The sukuk transaction, which is supposed to be exported specifically to the United Arab Emirates (UAE), is on the table regardless of this issuance.

Loans with interest higher than 42 percent

Tax authorities In auctions held this week, compound interest on the benchmark two-year bond rose to 42.18 percent from single-digit levels, where it fell due to regulations requiring banks to buy bonds. Despite the record drop in foreign participation between the two elections held in May, the composite yield, which fell to around 8.6 percent due to Central Bank regulations, has increased by more than 33 points in the six intermediate months. On the 10-year bond issue, compound interest increased to 31.98 percent.