Macro and Politics

* The Treasury borrowed TL142.3bn in total (including non-competitive sales) via yesterday’s 4y TLREF-indexed and 5y fixed coupon bond auctions. The bid – to – cover ratio was high at 6.58x for 4y TLREF-indexed auction, indicating high demand, while the term rate was 23.98%. For 5y fixed coupon auction, the average cost of borrowing was 36.12% and bid – to – cover ratio stood at 1.76x.  Accordingly, the total domestic borrowing for the month reached TL306.5bn. After yesterday’s double auctions, the Treasury will hold the direct sales of 1y USD-denominated bond & 1y USD-denominated lease certificate on Thursday (tomorrow), finalizing its domestic borrowing program for August. According to its three-month (August – October 2025) domestic borrowing program, the Treasury faces a hefty domestic redemption of TL339bn in August, while in return it plans to borrow TL440.8bn in total throughout the month, indicating a roll-over ratio of 130%. Hence, having already raised a total of TL306.5bn through domestic borrowing since the beginning of the month, the Treasury is expected to borrow around TL135bn via Thursday’s double direct sales.