June 2 (Bloomberg) -- Turkish bonds rallied for a third day and the lira gained to the highest in two weeks on the prospect of lower debt issuance as the government expects additional tax revenue this year.
Two-year bond yields dropped 11 basis points, or 0.11 percentage point, to 8.75 percent, according to data compiled by Bloomberg at the 5 p.m. close in Istanbul. The lira strengthened 0.9 percent to 1.5853 per dollar, the highest since May 19.
The government expects about 13.5 billion liras ($8.5 billion) in additional revenue this year, in payments of overdue tax debts restructured in a government offer, Finance Minister Mehmet Simsek said today. Turkey’s priority is to use the revenue to reduce the country’s indebtedness, Simsek said. The government is targeting a budget deficit of 33.5 billion liras this year, the ministry said last month.
“The prospect of falling government debt issuance is benefiting the bond market and probably this will be a lasting effect,” Tufan Comert, a strategist at Garanti Securities in Istanbul, said by phone today. “The Treasury will probably not have to borrow from abroad in the rest of this year.”
The main ISE National 100 index fell 0.2 percent to 63,112.60.
“After the weaker data released both at home and abroad, we are starting to view short and medium-term bond yields as quite attractive,” Erkin Isik, a fixed-income strategist at Turk Ekonomi Bankasi, said in a report today. TEB is a unit of BNP Paribas in Turkey.
--Editors: Linda Shen, Gavin Serkin
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