Turkey Yields Sink First Week in Five as Funding Rate Declines

Turkish yields slid for a third day, posting their first weekly drop in five weeks, as the central bank provided funding at rates below inflation.

Yields on two-year benchmark debt decreased 19 basis points, or 0.19 percentage points, to 10.81 percent at the 5 p.m. close in Istanbul, a Turk Ekonomi Bankasi index of the securities showed. That gives a weekly decline of 65 basis points. The lira slumped 0.7 percent to 1.8644 versus the dollar, weakening for the first time in six days.

“The central bank has eased liquidity significantly,” Bugra Bilgi, a hedge fund manager at Garanti Asset Management, said in e-mailed comments. “Yields between 11.80 and 12 percent are looking seriously attractive.”

Turkey’s central bank lent three billion liras ($1.6 billion) in a one-week repo auction at its lowest annual rate of 5.75 percent today, after getting 13.2 billion liras of bids from banks.

The bank in Ankara also provided three billion liras in a one-month repo auction at an average annual rate of 11.71 percent today, against bids of 15.8 billion liras. This will be the fourth day the bank offers funding at 5.75 percent after refraining from offering that level since Dec. 29.

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

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

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