Turkish Long-Term Bonds Rise 2nd Day Before Debt Sales Next Week

Turkey’s 10-year lira bonds rose for a second day on investor expectations of strong demand in next week’s debt sales as yields are at a level considered “attractive” by the country’s top brokerage.

Yields on the debt slid five basis points, or 0.05 percentage point, to 6.89 percent by 2:50 p.m. in Istanbul, retreating from a six-week high of 6.98 percent two days ago.

“Levels around 7 percent are attractive and people are buying bonds at these levels again,” Ugur Kucuk, a fixed-income strategist at Is Investment Securities in Istanbul, said in e- mailed comments. “I expect good demand in the auctions.”

Turkey will offer 10-year fixed-coupon bonds and 10-year inflation-linked debt in auctions next week as part of its plan to raise 13 billion liras from the domestic market in February. It will also sell two-year benchmark notes and five-year bonds, according to Ankara-based Treasury’s debt sale plan published on Jan. 31. It will repay 15.2 billion liras of domestic debt this month.

The lira weakened for a second day, down less than 0.1 percent to 1.7691 per dollar, according to data compiled by Bloomberg. Yields on two-year debt rose one basis point to 5.78 percent.

Ten-year lira yields have jumped 25 basis points since Moody’s Investors Service damped speculation of a credit rating upgrade on Jan. 28, saying Turkey’s current-account gap renders the country vulnerable to external shocks and sending the spread with two-year notes to their widest since August 2011 on Feb. 7.

Turkey offers the highest yields after Brazil and India for longer-dated debt among 21 major emerging economies tracked by Bloomberg.

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

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net