Turkey Offers 10-Year Bonds After Borrowing Costs Slide
February 08, 2012, 7:09 PM ESTBy Steve Bryant and Selcuk Gokoluk
(Updates with bond yields in the sixth paragraph.)
Feb. 8 (Bloomberg) -- Turkey is offering 10-year dollar bonds for the second time in three weeks, seeking to benefit from the lowest borrowing costs in two months as concern about the crisis in Europe eased.
The Treasury in Ankara will sell at least $750 million of the Sept. 26, 2022 bonds to yield between 5.75 percent and 5.80 percent, according to three bankers who asked to remain unidentified because the details are private. It first sold $1.5 billion of the bonds at 6.35 percent on Jan. 18, when demand was about three times the amount on offer. Yields on similar maturity debt maturing in March 22, 2012 traded at 5.49 percent, near yesterday’s two-month low of 5.47 percent.
Investors are returning to Turkey, taking their cue from U.S. and European Union policy makers who are driving down interest rates and increasing access to cash. Banks such as Morgan Stanley and JPMorgan Chase & Co. say Turkey’s record current account deficit may have peaked, boosting confidence in an economy that grew 9.6 percent in the first nine months.
“It is pretty clear that Turkish Treasury wants to benefit from extremely abundant global liquidity conditions and positive sentiment, which is good news as global sentiment could change very quickly and easily,” Ozgur Altug, chief economist at BGC Partners in Istanbul, said in e-mailed comments to clients.
Citigroup
Turkey hired Barclays Plc, Citigroup Inc., and Credit Suisse Group Inc. to arrange the sale, the Treasury said in a statement on its website today.
Yields on the September 2022 bonds being offered today were at 5.67 percent at 4:28 p.m. Yields on similar bonds in Serbia, which has the same ‘BB’ rating as Turkey at Standard & Poor’s, trade at 7.29 percent.
Turkish stocks extended earlier gains, rising 0.8 percent to 61,022.00, the highest level since September. Yields on two- year lira bonds fell 4 basis points, or 0.04 percentage point, to 9.31 percent. The lira climbed 0.1 percent to 1.7467 per dollar, heading for the strongest level in three months.
The country plans about 9.5 billion liras ($5.2 billion) in external borrowing this year. Turkey had $2.7 billion in external debt repayments of capital and interest coming due in January and February, according to information in the Treasury’s latest debt-management report.
Moody’s Investors Service rates Turkey Ba2, two steps below investment grade, with a “positive” outlook. Fitch Ratings, which ranks Turkey at BB+, one step below investment-grade status, cut the country’s outlook to “stable” from “positive” on Nov. 23, citing accelerating inflation and a widening current account deficit. Standard & Poor’s rating puts Turkey at two steps below investment grade.
The current account gap narrowed for the first time in two years in November, reducing the 12-month cumulative deficit to $77.8 billion, or about 10 percent of estimated gross domestic product. The budget deficit for last year was about 1.4 percent of GDP, Finance Minister Mehmet Simsek said on Jan. 16.
--With assistance from Mark Bentley in Istanbul. Editors: Mark Bentley, Aydan Eksin
To contact the reporters on this story: Steve Bryant in Ankara at sbryant5@bloomberg.net; Selcuk Gokoluk in Istanbul at sgokoluk@bloomberg.net
To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net
