The decline in Turkey’s 5-year credit default swap (CDS) continues, reflecting the country’s improving loan repayment status and decreasing risk premium. At the beginning of November, Turkey’s CDS premium fell below 400 basis points and continued to decline to below 350 basis points last week. Today, Turkey’s CDS reached its lowest level since March 19, 2021, with 343.1 basis points in transactions.
The Central Bank of the Republic of Turkey (CBRT) is set to announce its November interest rate decision on Thursday at 14:00. Markets are expecting the bank to slow down its interest rate hike and raise it by 250 basis points. The Central Bank has previously increased the interest rate by a total of 2650 basis points in five meetings: 650 basis points in June, 250 basis points in July, 750 basis points in August, and 500 basis points each in September and October.
As Turkey’s financial indicators continue to show improvements, the country’s CDS premium has been declining, reaching its lowest level in months. The upcoming interest rate decision from the CBRT will provide further insight into the country’s economic trajectory and the potential impact on financial markets.