Turkey to Raise $1.5 Billion With First Dollar Bond in Year

  • Yield on 10-year Eurobonds near lowest level this year
  • Turkish Treasury set to sell debt at yield of 5 percent

Turkey is selling dollar-denominated bonds for the first time since April as borrowing costs fall to the lowest level this year and investors speculate the U.S. 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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