Turkey to raise $1.5 bil­lion with first dol­lar bond in a year

The Pak Banker - - MAR­KETS/SPORTS -

Turkey is sell­ing dol­lar­de­nom­i­nated bonds for the first time since April as bor­row­ing costs fall to the low­est level this year and in­vestors spec­u­late the US won't rush to raise in­ter­est rates.

The Ankara-based Trea­sury is seek­ing to raise $1.5 bil­lion from the of­fer­ing of 10-year se­cu­ri­ties at a yield of 5 per­cent, ac­cord­ing to in­for­ma­tion from a per­son fa­mil­iar with the mat­ter, who isn't au­tho­rized to speak pub­licly and asked not to be iden­ti­fied.

The yield on sov­er­eign notes due April 2026 has dropped 14 ba­sis points to 4.91 per­cent in 2016, while a JPMor­gan Chase & Co. gauge of emerg­ing-mar­ket bonds climbed to the high­est since May.

"The Turk­ish Trea­sury has an un­canny knack of al­ways is­su­ing at the top of the mar­ket," Tim Ash, a credit strate­gist at No­mura In­ter­na­tional Plc, wrote in an e-mailed note to clients. "They al­ways like to calm their own nerves by get­ting in early, and get­ting some money un­der their belts."

Emerg­ing-mar­ket bonds have gained as neg­a­tive yields in Europe and Ja­pan boost de­mand for higher rates while fu­tures traders pre­dict the U.S. won't in­crease in­ter­est rates be­fore Septem­ber. De­mand for riskier as­sets has also in­creased as com­mod­ity prices sta­bi­lized and China took steps to calm fi­nan­cial mar­kets.

Bank of Amer­ica Mer­rill Lynch, Cit­i­group Inc., and Deutsche Bank AG were hired for the sale, Turkey's Trea­sury said in a state­ment on its web­site. Turkey plans to raise as much as much $4.5 bil­lion of debt in in­ter­na­tional cap­i­tal mar­kets this year, ac­cord­ing to its fi­nanc­ing pro­gram pub­lished in Jan­uary.

Gi­u­liano Palumbo, a Mi­lan-based money man­ager at Arca SGR, who is con­sid­er­ing whether to buy the bond, said at five ba­sis points be­low the ini­tial guid­ance, the price of the debt "still looks good."

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