Turkey may issue more debt
Güncelleme Tarihi:
Reuters
Oluşturulma Tarihi: Ocak 13, 2009 00:00
ISTANBUL - After a positive launch of its new $1 billion bond, banking sources say Turkey will issue more debt early in 2009 to tap improving investor sentiment and scarce markets before a wave of non-emerging debt goes on sale.
The Turkish Treasury has said it intends to issue a total of 5.6 billion Turkish Liras ($3.56 billion) of foreign-exchange denominated debt in 2009, as it looks to service a massive current account deficit, which in 2008 reached $42.35 billion according to economists' estimates, and shore up its faltering economy. Turkey must also replenish its foreign exchange reserves, and plug an external financing shortfall estimated by Finance Minister Mehmet Şimşek at $15-$30 billion.
The country is in talks with the International Monetary Fund, or IMF, on a new loan deal seen at around $25 billion. Banking sources said they expect Turkey to issue another eurobond in January, and see more than half of the official sum of planned borrowing completed within the first months of 2009.
"If you look at the issuance pattern of the last years you can see the Treasury has typically made two eurobond issues. I see no reason for this to be otherwise this year," said
"Turkey should be quick and show its hand early... I expect the Treasury to finish more than half of its planned eurobond issuance in the first few months," he added, as other emerging markets and major economies will also be planning issuance.
Emerging sovereign debt spreads over U.S. Treasuries have declined recently, leading to a flurry of new issuance at the start of 2009. Last week Turkey sold a $1 billion 2017 bond with a yield spread over U.S. Treasuries of 501.3 basis points and a yield to maturity of 7.5 percent. The bond was twice oversubscribed.
Overstated fears
It has become more expensive for Turkey to borrow, but less so than some analysts had feared. Turkey's last issue of forex denominated debt was in September 2008, when it sold a $1.5 billion eurobond due 2019, at a 7.0 percent yield, and spread of 334.4 basis points.
"Turkey has got a big chunk of its borrowing out of the way, and now they can look forward to the next window," said Maryam Khosrowshahi, co-head of public sector debt capital markets at Citigroup.
"The more savvy, well-known issuers in the market can react much faster to windows of opportunity. Those that are less well-known have to do much more investor work, which opens them up to more market risks." Citigroup and HSBC lead managed January's $1 billion 2017 bond.
Emerging sovereign debt issues dried up following the mid-September collapse of Wall Street giant Lehman Brothers, but picked up in the first trading week of 2009 as Brazil, Colombia, the Philippines and Turkey raised a total of $4.5 billion on international debt markets.
Emerging sovereign debt spreads on the secondary market hit their widest levels in six years to give an average yield premium of more than 900 basis points over U.S. Treasury bonds in October but have since eased back to around 630 basis points, helped by a broader recovery in risk appetite.
However, G7 countries have hugely inflated borrowing needs this year as they look to spend themselves out of recession, which will leave emerging economies having to pay more and time their issuance shrewdly.
The country is in talks with the International Monetary Fund, or IMF, on a new loan deal seen at around $25 billion. Banking sources said they expect Turkey to issue another eurobond in January, and see more than half of the official sum of planned borrowing completed within the first months of 2009.
"If you look at the issuance pattern of the last years you can see the Treasury has typically made two eurobond issues. I see no reason for this to be otherwise this year," said
"Turkey should be quick and show its hand early... I expect the Treasury to finish more than half of its planned eurobond issuance in the first few months," he added, as other emerging markets and major economies will also be planning issuance.
Emerging sovereign debt spreads over U.S. Treasuries have declined recently, leading to a flurry of new issuance at the start of 2009. Last week Turkey sold a $1 billion 2017 bond with a yield spread over U.S. Treasuries of 501.3 basis points and a yield to maturity of 7.5 percent. The bond was twice oversubscribed.
Overstated fears
It has become more expensive for Turkey to borrow, but less so than some analysts had feared. Turkey's last issue of forex denominated debt was in September 2008, when it sold a $1.5 billion eurobond due 2019, at a 7.0 percent yield, and spread of 334.4 basis points.
"Turkey has got a big chunk of its borrowing out of the way, and now they can look forward to the next window," said Maryam Khosrowshahi, co-head of public sector debt capital markets at Citigroup.
"The more savvy, well-known issuers in the market can react much faster to windows of opportunity. Those that are less well-known have to do much more investor work, which opens them up to more market risks." Citigroup and HSBC lead managed January's $1 billion 2017 bond.
Emerging sovereign debt issues dried up following the mid-September collapse of Wall Street giant Lehman Brothers, but picked up in the first trading week of 2009 as Brazil, Colombia, the Philippines and Turkey raised a total of $4.5 billion on international debt markets.
Emerging sovereign debt spreads on the secondary market hit their widest levels in six years to give an average yield premium of more than 900 basis points over U.S. Treasury bonds in October but have since eased back to around 630 basis points, helped by a broader recovery in risk appetite.
However, G7 countries have hugely inflated borrowing needs this year as they look to spend themselves out of recession, which will leave emerging economies having to pay more and time their issuance shrewdly.