By Tyler Durden
At the peak of the Turkish currency crisis in mid-August, in addition to general concerns about the state of the local economy, one sector got hit especially hard: Turkish banks, which saw their bonds plunge amid growing concerns that the currency slump would makes it impossible for lenders to repay dollar-denominated debts or rollover maturities.
The prompt liquidation was driven by were fears that Turkish lenders would struggle to find the capital to repay the $34.4 billion of bonds sold during a decade of rapid economic growth and historically low global borrowing costs. The near-term along is daunting as Turkish banks have to service $7.6 billion in USD-denominated debt by the end of 2019.
So in a panic scramble to shore up liquidity and reassure investors of their viability, Turkish banks pulled as much as $4.5 billion worth of gold reserves, which they then sold in exchange for “more liquid” assets.
Zooming on just the recent action shows that weekly holdings reported by the Central Bank of Turkey fell by a whopping 20% since June 15 to 15.5 million ounces according to Bloomberg, with the bulk of the exodus, or $3.3 billion, sparked by the central bank’s …read more
Source:: Zero Hedge