Nov. 21 (Bloomberg) -- Developing nations' borrowing costs rose the most in a month this week, hampering the ability of governments to refinance $1.2 trillion of short-term debt and hastening appeals for international bailouts.

The extra yield investors demand to own emerging-market government bonds instead of U.S. Treasuries climbed for an eighth day, to 7.76 percentage points from 6.7 percentage points last week, according to JPMorgan Chase & Co.'s EMBI+ index.

Developing-nation debt has slumped this week amid concern mounting credit losses will deepen a global recession. Turkey is seeking between $20 billion and $40 billion from the International Monetary Fund, potentially doubling emergency loans provided this month to Hungary, Ukraine, Iceland, Pakistan and Serbia. Latvia said yesterday it will also ask for IMF support and Belarus is in talks for at least $2 billion of aid.

``Clearly we are in the early stages of a crisis in emerging markets,'' said Neil Dougall, head of emerging-market research at Dresdner Kleinwort in London. ``The fact we have already seen $80 billion penciled in for possible dispersion indicates that the IMF is going to be facing quite significant pressure.''

Developing nations in Europe and Asia have about $500 billion each of government debt due in the next 12 months, while Latin America must repay $175 billion, according to Capital Economics Ltd. in London. Turkey and Russia each have about $100 billion owing and Poland has $85 billion.

Turkey-IMF Talks

While Russia has the world's third-largest pool of currency reserves at $453.5 billion to back payments, Turkey's short-term debt dwarfs its $70.5 billion of reserves. Turkey already owes $8.5 billion to the IMF, which is five times more than its quota, and the proposed loan would take its debt to an all-time high of between 17 and 23 times, Merrill Lynch & Co. analysts said in a report today.

``Turkey needs an IMF arrangement to meet its large external refinancing needs,'' said Ilker Domac, an economist at Citigroup Inc. in Istanbul. The package will be closer to $20 billion than $40 billion and should allow Turkey to access the funds as needed to repay debt rather than a ``precautionary'' arrangement, he said.

Talks between Turkey and the IMF are ``still ongoing at both policy and technical levels,'' Hossein Samiei, the IMF's representative in Ankara, said in an e-mail yesterday.

The yield premium on Turkey's dollar debt has widened 46 basis points this week to 6.47 percentage points, according to JPMorgan. The average spread on emerging-market government bonds has more than tripled in the past six months and reached a six- year high of 8.65 percentage points on Oct. 24.

Russia's Reserves

``Market conditions suggest that few, if any, emerging- market governments will have the luxury of tapping the markets at acceptable levels in the short term,'' said Ivailo Vesselinov, a senior economist at Dresdner Kleinwort in London.

Russia's reserves have dropped 24 percent since Aug. 8 as the central bank uses the money to prop up the weakening ruble. Investors are cutting their Russian holdings as oil, the nation's main export earner, trades at $50 a barrel, down more than 60 percent from the peak in July.

The spread on Russian dollar bonds today jumped 82 basis points to 8.60 percentage points, according to JPMorgan.

Latvia is asking for IMF assistance after the government spent $334.9 million of its $5.4 billion of currency reserves last week to defend its currency, the lati. The Baltic nation will need as much as 1.2 billion lati ($2.1 billion) in an IMF standby loan, said Andris Vilks, chief economist at AS SEB Banka.

Belarus requested a loan of ``no less than'' $2 billion from the IMF last month to invest in manufacturing and jobs after a slump in the country's exports, which account for 60 percent of gross domestic product.

Venezuelan Buyback

Venezuela has bought back $800 million of international bonds and may make more purchases, Finance Minister Ali Rodriguez said yesterday, according to Reuters. The buy-back included 9.25 percent bonds maturing in 2027, Rodriguez said. A Finance Ministry spokesman declined to comment when contacted by Bloomberg News.

The 9.25 percent bonds gained 0.25 cent to 64.25 cents on the dollar today, pushing the yield down 6 basis points to 14.98 percent, according to JPMorgan.

Ecuador's bonds fell a day after a government debt audit commission said it uncovered ``illegality and illegitimacy'' in the country's foreign obligations. President Rafael Correa reiterated that his government won't pay ``illegitimate debt'' after receiving the report from the commission. He didn't say whether he plans to make an overdue $30 million interest payment on the country's 2012 bonds before a monthlong grace period expires in December.

The yield on the 2012 bonds rose 2.15 percentage points today to 69.43 percent, according to JPMorgan. The bond's price dropped 1 cent on the dollar to 25 cents.

To contact the reporter on this story: Laura Cochrane in London at lcochrane3@bloomberg.netLester Pimentel in New York at lpimentel1@bloomberg.net

Last Updated: November 21, 2008 10:35 EST