Turkish benchmark bond yields advanced for the first time in five days as the central bank raised the cost of funding for lenders by reducing the amount of money supplied at its daily repurchase auction.
The yield on two-year lira-denominated notes climbed 12 basis points, or 0.12 percentage point, to 5.96 percent at 4:19 p.m. in Istanbul, after falling the most since January 2012 yesterday. The lira strengthened 0.2 percent to 1.7818 per dollar, the highest intraday level since Feb. 20.
The central bank provided 2.5 billion liras ($1.4 billion) in its repo auction today at its 5.50 percent benchmark interest rate, the smallest amount in four days. It received bids for 10.5 billion liras from lenders. The overnight cost of borrowing in the interbank market rose to its highest in a week at 5.84 percent, according to data compiled by Bloomberg.
“Local investors are taking profit as the liquidity is tight,” Bugra Bilgi, a hedge fund manager at Garanti Asset Management in Istanbul, said in e-mailed comments.
Turkey’s Treasury sold a total 1.97 billion liras of benchmark two-year fixed-coupon bonds at an average yield of 5.97 percent in an auction and earlier non-competitive sale, compared with 6.17 percent at a sale of the same debt on March 19. The Treasury also sold a total of 2.48 billion liras of 10- year CPI-linkers at an average real interest rate of 0.96 percent in a separate auction, compared with 1.01 percent in a sale on Feb. 18.
Turkey hired Citigroup Inc., Credit Suisse Group AG and JPMorgan Chase & Co. to sell 30-year dollar bonds, according to a Treasury statement. The bond may yield about 5 percent, according to information from person with knowledge of the offering, who asked not to be identified because the information isn’t public.
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