Turkish Bonds Fall as Treasury Borrowing, Oil Weigh on Prices

Turkish bonds fell for a second day as the Treasury’s borrowing schedule weighed on yields while economic data from China and rising oil prices dimmed prospects for continued narrowing in the current-account deficit.

Two-year bond yields rose four basis points to 5.73 percent at 12:20 p.m. Yields have advanced eight basis points since hitting a record low of 5.65 percent on Feb. 2. Yields on 10-year bonds increased six basis points to 6.93 percent, the highest level since Jan. 4 on a closing basis.

The Treasury plans to borrow 150.6 billion liras ($85 billion) in domestic debt auctions this year, a 47 percent increase compared to last year, according to the program announced on Oct. 31. It may borrow 13 billion liras in five auctions this month, while paying off debt of 15.2 billion liras. Borrowing in March and April is planned to reach 10 billion liras and 14 billion liras, respectively.

The advance in two-year yields is linked to the borrowing program, which “limits downward movement,” according to Ozlem Derici, chief economist at Istanbul-based Ekspres Invest.

Rising oil prices and the decline of the lira against the dollar are also having an impact, according to Bora Tamer Yilmaz, an economist at Istanbul-based Halk Yatirim.

“Oil’s rise is seen as negative for the current-account deficit and inflation,” Yilmaz said in e-mailed comments today. Strong macroeconomic data coming from China creates “demand-side pressure” that may boost oil prices further, he said.

Brent crude has gained 6.5 percent this year to $118.41 a barrel, according to data compiled by Bloomberg.

The lira fell 0.1 percent to 1.7729 per dollar, paring this year’s gain to 0.6 percent.

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