Bloomberg News

Turkish Bond Yields Drop to Lowest Since May at 2-Year Auction

July 19, 2011

July 19 (Bloomberg) -- Turkish two-year benchmark bond yields fell to the lowest since May in an auction today.

Turkey’s Treasury sold 2.80 billion liras ($1.7 billion) of May 2013 bonds at an average yield of 8.81 percent.

Borrowing costs are falling after the central bank said this month the need for monetary tightening is lessening because growth will slow and the outlook for inflation is “positive.” Policy makers have held interest rates at a record low of 6.25 percent since January while lifting reserve requirements to cut the amount banks have available to lend.

“The yield on the benchmark was better than expected,” Ugursel Onder, a fixed-income analyst at brokerage Is Investment, said in e-mailed comments. Onder said yields between 8.86 percent and 9 percent had been anticipated. “Demand for the benchmark bond was strong.”

The yield on the two-year notes was at 8.82 percent at the 5 p.m. close in Istanbul, data compiled by Bloomberg show. That’s eight basis points, or 0.08 percentage point, below yesterday’s 8.9 percent close and the lowest since June 2, a Turk Ekonomi Bankasi AS index showed.

The Treasury also sold 1.13 billion liras of January 2020 fixed-coupon bonds at a 9.61 percent average yield in a separate auction and non-competitive sale. The Treasury sold the bond at an average yield of 8.95 percent on June 7 and 8.30 percent on May 10.

The lira appreciated 0.1 percent to 1.6570 per dollar, strenghtening for the first day in four.

--Editors: Linda Shen, Gavin Serkin

To contact the reporter on this story: Selcuk Gokoluk in Istanbul at sgokoluk@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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