Turkey to sell $4.2 billion of debt to support state-run banks

Turkey’s Treasury will seek buyers for 3.7 billion euros ($4.2 billion) of debt to support state-run banks in a sale on Wednesday.

The Treasury will offer 3.3 billion euros of five-year zero-coupon bonds with an annual interest rate of 4.61 percent, according to a statement on Monday. The government will also sell 400 million euros of interest-free five-year bonds for state-owned Islamic lenders, it said.

Turkey announced a plan earlier this month to support the country’s beleaguered banking industry via about $5 billion in financial support for government-run banks. Treasury and Finance Minister Berat Albayrak said non-state banks would also raise capital when needed.

Ziraat Bank will receive 1.4 billion euros of the capital earmarked from Wednesday’s debt sale. Halkbank will get 900 million euros and VakıfBank 700 million euros.

Turkey’s banking industry requires more capital after a currency crisis last year and a resulting economic recession caused an increase in non-performing loans and requests by firms to restructure billions of dollars in foreign debt. The government is seeking to support the sector to help return the country to economic growth.