Nov 08 2018

Turkish exit from currency crisis continues with euro bond sale

Turkey borrowed 1.5 billion euros via a euro-denominated bond issue to investors on Wednesday, the Turkish Treasury and Finance Ministry said.

The sale of the benchmark bonds, which yield 5.25 percent annually and mature in February 2026, attracted an orderbook of more than three times the size of the issue, the ministry said on its website.

The international borrowing is Turkey’s second since a currency crisis that rocked its financial markets during the summer started to dissipate. It follows a $2 billion bond issue last month that carried an annual return of 7.5 percent.

The interest rate in the euro bond sale was 456.4 basis points above international benchmarks compared with 447.5 basis points for the October sale and 266.7 basis points for the sale of $2 billion of bonds in January.

Turkey's lira has strengthened from a record low of 7.22 per dollar reached in August to trade at 5.42 against the U.S. currency on Thursday. But it has lost almost a third of its value this year amid concerns for economic overheating and due to a political crisis with the United States.

The ministry said 35 percent of the bonds were sold to investors in the U.K., 20 percent in the United States and 14 percent in Germany and Austria.

The sale brings Turkey’s borrowing in international capital markets this year to $7.7 billion.