Istanbul Mover

Turkiye Is Bankasi AS (ISCTR), Akbank TAS (AKBNK) and Turkiye Garanti Bankasi AS (GARAN) led gains on the Borsa Istanbul today as bond yields dropped the most in more than 14 months, helping cut their funding costs.

Isbank, Turkey’s third-biggest lender by market value, added 4.3 percent, rising for the first time in six days, to close at 6.74 lira in Istanbul. Akbank climbed 1.8 percent, the most since March 26, to 9.14 lira. Garanti, the lender co-owned by Spain’s Banco Bilbao Vizcaya Argentaria SA (BBVA), rose 3.1 percent, also the first advance in six days, to 9.32 lira. The 16-member banking index surged 2.4 percent in its biggest advance since March 8, leading gains on the Borsa Istanbul National 100 (XU100) index, which rallied 1.6 percent.

Two-year benchmark bond yields plunged as much as 31 basis points, the most since January 2012, to 5.78 percent. Earlier in the day, the Treasury in Ankara sold 3.08 billion liras ($1.72 billion) of five-year debt at an average yield of 6.38 percent, down from 6.54 percent in a March 18 sale of the same-maturity debt.

“The continuing decline in yields is having a positive effect on banking stocks,” Alpay Dinckoc, an analyst at Oyak Securities in Istanbul, said in a phone interview today. The drop helps cut their cost of deposits, he said.
Upgrade Inflows

Standard & Poor’s upgraded Turkey to one level below investment grade on March 27, matching the rating from Moody’s Investors Service. Fitch Ratings raised Turkey to investment grade in November.

“Until the last week of March, there was a pronounced slowdown in foreign capital inflows,” Gizem Oztok Altinsac, an economist at Garanti Investment in Istanbul, said in a note to investors today. This picture changed after the March 27 rating upgrade from S&P, Altinsac said, noting that the acceleration in capital inflows would correspond to an “increase in loans and recovery in the economy.”

The average annual interest rate that Turkish banks pay savers for one-year deposits dropped to 6.63 percent today, down from 7.05 percent at the start of the year, according to data compiled by Bloomberg. That compares with investor expectations of 5.64 percent annual inflation, as implied by the two-year breakeven rate.

Yapi Kredi Sigorta AS (YKSGR) was set for the steepest drop in more than a decade after parent Yapi & Kredi (YKBNK) Bankasi AS agreed to sell the insurer to Allianz SE for less than yesterday’s closing price.

The shares of Yapi Kredi Sigorta tumbled 17 percent, poised for the biggest retreat since June 2002, to 17.95 liras at 3:28 p.m. in Istanbul. About 275,000 shares traded, 4.3 times the stock’s three-month average daily volume, according to data compiled by Bloomberg. Yapi & Kredi, the parent co-owned by UniCredit SpA (UCG), lost 1.1 percent. The Istanbul Stock Exchange National 100 (XU100) index dropped 0.5 percent.

“This deal implies a price of 18.68 liras a share for Yapi Kredi Sigorta,” Hasan Demir, an analyst at Tera Brokers in Istanbul, said by phone. “The stock had been rising for a long time on expectations of a sale – so some investors may also be realizing profits.”

Allianz (ALV) will purchase 94 percent of the insurer from Yapi & Kredi, including the life insurance and pensions unit Yapi Kredi Emeklilik AS, for 1.79 billion liras ($983 million), Yapi & Kredi said in a statement on its website. The lender will then buy back a 20 percent stake in the pensions unit for 188 million liras. The sale is expected to boost Yapi & Kredi’s capital adequacy ratio to 17.1 percent from 16.3 percent at the end of 2012, the bank said.

Assuming that a mandatory tender offer by Allianz for the listed 6.1 percent of the company won’t be below 18.68 liras a share, the level reached after today’s drop is “reasonable,” Demir said. Allianz said it will conduct a mandatory offer for remaining stock after the transaction is complete.

Tofas Turk Otomobil Fabrikasi AS headed for the biggest gain in almost three weeks after the joint venture of Fiat SpA and Turkey’s Koc Holding AS unveiled plans for two new car models.

The shares rose 1.9 percent, the most on a closing basis since Jan. 24, to 10.55 liras at 4:07 p.m in Istanbul. The benchmark index fell 1.1 percent.

Tofas in July will disclose details of two models set to go on sale after 2015, which may carry the company to full production of 400,000 vehicles a year, Chief Executive Officer Kamil Basaran told a news conference Feb. 8. The joint venture also plans to sell its “Doblo” van in the U.S. starting from the end of next year, Basaran said.

“There was previous mention of a new model, but this is the first time a time frame is mentioned,” Esra Suner, vice president of research at Is Investment in Istanbul, said by phone today. The models should have a positive effect on the stock over the long term, she said.

Tofas was also raised to overweight from neutral at HSBC by analyst Cenk Orcan today, raising the price target to 12.7 liras from 10.1 liras. Eleven analysts have a buy rating on the stock, 15 say hold and one recommends selling it, the data show.

The automaker has a 13.2 percent domestic market share with the Fiat brand as of the end of 2012, according to a presentation on its website. The “Linea” model is the best- selling sedan in Turkey, while “Doblo” is the best-selling light commercial vehicle, the company says in the presentation.

Tofas reported 2012 net income of 448.3 million liras ($252.6 million) after markets closed on Feb. 6, above the 445.6 million liras average estimate of 21 analysts.