Turkey Yields Rebound on Bets Post-Auction Decline Went Too Far

Turkey’s bond yields rallied, rebounding from the biggest drop in a year, on speculation the decline was excessive.

Yields on benchmark two-year notes rose eight basis points, or 0.08 percentage point, to 5.97 percent at the close in Istanbul. The yield dropped 23 basis points yesterday, the most since January 2012. The lira strengthened 0.2 percent against the dollar to 1.7725 in its fifth day of gains.

Benchmark bond yields fell 47 basis points between Jan. 4 and yesterday as the Treasury sold dollar bonds on Jan. 8 at a record low yield of 3.47 percent. Primary dealers’ demand for a new tranche of two-year notes exceeded the debt on offer by 50 times in a non-competitive sale on the same day, central bank data showed. Bids for January 2015 lira debt were at 7.4 times the amount available for sale in a competitive auction.

“Some people have said ‘enough’ for the level bond yields have fallen,” Bugra Bilgi, a hedge fund manager at Garanti Asset Management in Istanbul, said in e-mailed comments today.

The Treasury sold $1.5 billion of 2023 dollar bonds, with demand at more than twice the amount offered.

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