Page 67 - TURKRptJul19

Turkey’s Ministry of Treasury and Finance has sold $2.25bn worth of US dollar-denominated eurobonds due 2024 at a coupon rate of 6.35% and a yield to investor of 6.45%, the ministry said on July 3. The total amount of the US dollar bond issuance was converted into an equivalent euro liability. As a result of this swap transaction, the euro denominated coupon rate was realised as 3.803%. The spread over the US Treasury papers rose to 470bp from the 454bp seen in the previous eurobonds sale held in March. The new issue premium was slim and the deal was timed to take advantage of a tremendous rally in Turkish asset prices coupled with falling global yields that tightened the yield curve in Turkish eurobonds, but not all investors are convinced, Global Capital reported on July 3 in a story entitled “Turkey snags $2.25bn thanks to rallying market”. With this transaction, the amount of funds that has been raised from the international capital markets by the Turkish Treasury in 2019 has reached a total of approximately $8.7bn. Turkey’s overall foreign currency debt sales, including sukuks sold to local and foreign investors, gold-backed securities issued in the domestic market and private placements to shore up state banks, jumped to a record high of about $20bn so far this year compared to the below $10bn figures seen in 2017 and 2018, Bloomberg reported. 39% of the bonds have been sold to investors in the UK, 27% in the US, 18% in other Europe, 12% in Turkey, and 4% in other countries. The eurobond sale that followed a tiny $150mn issuance by state-run Vakifbank suggested that the Erdogan administration has managed to revive its foreign financing channels it had temporarily halted with a series of consecutive scandals starting from the shutdown of the lira swap market in London prior to the March 31 local polls thanks to latest easing waves from the leading central banks in the world. “Liquidity is in the driving seat, and the expectation of more accommodative monetary policy in Europe is driving demand for paper that
67 TURKEY Country Report July 2019 www.intellinews.com