(Updates with pre-financing for this year in fourth paragraph.)
Oct. 17 (Bloomberg) -- Turkey asked Bank of America Merrill Lynch and HSBC Holdings Plc to arrange a sale of dollar- denominated bond maturing in 2022, according to a statement on the Ankara-based Treasury’s website today.
The papers may be priced to yield about 3.1 percentage points, or 310 basis points, over similar-maturity U.S. Treasuries, according to a banker with knowledge of the transaction. The sale is due to be completed today, the banker said.
Turkey is reaching out to borrow abroad after announcing a three-year economic program that sees its budget deficit narrowing from about 1.7 percent of gross domestic product to 1.5 percent next year.
Turkey plans to raise a total of about 12.5 billion liras ($6.8 billion) in foreign borrowing this year, including payments from international lenders such as the World Bank. It sold $1 billion of 30-year bonds on Jan. 5 and $2.3 billion in yen-denominated 10-year debt on March 11. The Treasury also sold 500 million euros ($689 million) in debt in November last year that it said was pre-financing for this year.
Turkey’s foreign-currency debt is rated two levels below investment grade by Moody’s Investors Service, on par with Jordan and the Philippines, while Fitch Ratings has Turkey one level below with a positive outlook. Standard & Poor’s assigned an investment-grade ranking to Turkey’s local-currency debt Sept. 20 while keeping the foreign-currency rating two levels below.
The government announced on Oct. 13 economic plans aiming for a tighter budget than the program published last year, with debt to GDP declining from 39.8 percent at the end of this year to 35 percent in 2013 and 32 percent in 2014. The previous plan, which covered the three years to 2013, forecast debt of 36.8 percent at the end of the period.
--With assistance from Hannah Benjamin in London and Esteban Duarte in Madrid. Editor: Aydan Eksin
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