TWF to the rescue?


Bloomberg has recently reported that Turkey’s newly established Sovereign Wealth Fund, or the Turkish Wealth Fund (TWF) as it is called, is in talks with foreign lenders, including the ICBC, China’s largest bank, “showing its first signs of life after more than a year of inactivity brought on by internal disputes over its strategy and management.”

Whether the deal will materialize or whether the TWF is financially and structurally ready for such deals are another matter (in fact the ending of the article is not so encouraging in that regard), but the fact that TWF should be trying to borrow does not come as a surprise to us.  With very little net borrowing taking place by the private sector, modest FDI inflows and most financing this year having come in the form of portfolio flows, it is not so surprising that the public sector should be stepping up its efforts to tap international capital markets.

The problem is that coping with Turkey’s $210 billion financing requirement takes more than $5-$10 billion borrowing by a Fund that is in its infancy. It takes bolder efforts, a “new story” if you will, that somehow decisively removes Turkey off that “Fragile Five” list, introduced by Morgan Stanley back in 2013.  The news on that front is not so great, however — the list has shrunk recently, but in most analysts’ views. still has Turkey firmly there.