Deutsche Bank Sells Biggest Note Tied to Turkish Debt Since 2007

Deutsche Bank AG (DBK) sold the largest structured note tied to the debt of Turkey in six years, as the nation’s bonds rally after its central bank signaled it may cut interest rates to spur growth.

Germany’s biggest bank raised 151 million Turkish lira ($84.6 million) from credit-linked notes due December 2017, according to data compiled by Bloomberg. The coupon on the notes is based on a benchmark that measures the cost of exchanging floating- and fixed-rate interest payments.

Sebastian Howell, a spokesman for Frankfurt-based Deutsche Bank in London, declined to comment on the sale.

Turkish government bonds rallied after central bank Governor Erdem Basci said on April 3 that a “measured rate cut” may be in store. Yields on two-year lira bonds tumbled the most in almost five months, reaching 5.74 percent at 11:04 a.m. in Istanbul today, Bloomberg data show.

DZ Bank AG and Morgan Stanley joined Deutsche Bank in selling a total of $153 million of notes tied to Turkish sovereign debt this year, Bloomberg data show. That beats $107 million raised last year and $143.1 million issued in 2011, Bloomberg data show.

Structured notes are securities created by banks that package debt with derivatives to offer customized bets to investors while earning fees and raising money. Derivatives are contracts whose value is based on stocks, bonds, currencies and commodities.

To contact the reporter on this story: Alastair Marsh in London at amarsh25@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net

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