There was an interesting news on foreign news sites. “The Turkish Treasury uses banks to reduce credit default swaps. dollar asked him to buy the bond.”
In every environment, dollars, interestinflation, unemployment… Turkey is trying to move forward with unrealistic data… It was a place where they did not touch and artificial valuation.
Is useful? Your eyes give you away, you know…
Can credit default swaps be reduced by buying Eurobonds? It can be done in theory. What does it do? Türkiye can borrow at a lower cost.
Let’s rewind a bit… Let’s explain it thoroughly.
In the world markets, the insurance pricing of the risk of Turkey’s inability to pay its debts has reached very high levels. abbreviation of three letters “CDS” it is called.
Its meaning can be translated as “credit default swap” or “your job is up to prayer”. Why would anyone lend you money when you have such pricing? The expense presses red or black in roulette… Almost the same probability…
Who will lend to Turkey?
This CDSs It looks like a credit rating, but it works with different dynamics. It is usually offered as a service provided through investment banks for lenders who do not want to take the risk of government default.
It is not an organized institution… It is a kind of stock market… It is priced instantly. There is a buyer, there is a seller. It is formed by the rates given by the insurers at the financial terminals. In other words, states cannot intervene much.
So how is it done then? You go and buy Turkish bonds. You don’t get insurance. So you hope that other bond buyers will lower their insurance premiums… So you throw stones into the well.
Turkey’s CDS It’s now up to 700. The meaning of this in the financial markets is that Turkey’s going into a balance of payments crisis is a short time away.
How does this affect us? The costs of borrowing money from abroad are crazy. Rates that make even loan sharks envy fly in the air… Even they don’t dare…
We need 203 billion dollars!
First, you look at how much America is borrowing. So, is the economy the same as America and Türkiye? Would you lend me more easily, or to Koç Holding? Same story…
Let’s say American debt securities are priced at 4 percent. Let’s add the insurance premium against the risk of “what if Turkey can’t pay”.
Here is Turkey CDS this is where it comes into play. It’s 700 points CDS “7 percent on debt for interest” means add more. as it stands dollar loan on the basis of interest rises to 11 percent. An unbearable cost is put before us.
Indeed, the result is interest not rate… It could be higher or lower. Some do not want to take insurance, take risks, earn more money. Some do not want to deal with insurance, they do not give any loans.
Let’s not get into debt then! Great idea, but we need to pay off existing debts.
In short, 75 billion dollar Central Bank minus reserves and 203 billion dollar short-term debt in hand foreign currency banknote printing house foreign currency Since he can’t print, money has to come from somewhere. Of course, in the meantime, the current account deficit must be closed in some way.
The end of the road for the Turkish economy!
Does it matter if the debt is privately or publicly owned? Of course not? From where? Since the private sector cannot pay its foreign debt in Turkish Lira, in foreign currency will turn and close the credit book…
The company gives Turkish Lira currency Who will demand it? From the institution, that is, his bank, which he exchanged… The bank is from the Central Bank, to which he sent the money… He has foreign currency If not, what will the Central Bank give?
Central Bank net foreign currency reserves minus 75 billion in dollars Since there is no rational price of a depleted asset, Dollar If it goes up to 27 tomorrow, no one will be surprised, and the demand will not stop.
A currency you need but cannot print… We burned the ships, there is no going back anymore… The time we allotted for the Turkish economy has come to an end.
For the continuation of the article, The Bazaar That Will Confuse After the Election!