Page 87 - TURKRptJun19

widened past a record Turkish lira 100bn ($16.5bn) in April and the government’s immediate borrowing needs are growing. The Treasury is scheduled to borrow TRY11bn in June and TRY19.5bn in July, the most since February. It’s unclear if the banks heeded the request from a senior official to buy more government bonds, but Bloomberg said the auction results provided some clues: the average simple yield offered for two-year government bonds sold on May 14 was 24.2%, almost 150 bp below the previous day’s close. The average yield accepted at the auction was 23.9%, and in the secondary market it has since climbed to 24.6%. The yield on two-year local-currency debt surged more than 650 basis points this year, touching an eight-month high of 26.2% last week. At TRY14.6bn, total borrowing for May was slightly below the government target of TRY15.9bn, data from the Treasury show. The Treasury sold TRY6.8bn to lenders in four separate competitive bond auctions on May 13 and May 14 and another TRY7.8bn through non-competitive sales. Overseas investors have sold more than $2.6bn of local-currency government bonds this year, central bank data shows, bringing their share in the market to a record low of 13%. At its peak in 2013, that share stood at 28%. Outflows accelerated after the government orchestrated a liquidity squeeze in the offshore lira market in March to stem a rout in the lira. That forced some foreign investors to offload their holdings.
Turkey raises €1bn from local lenders via 364-day euro lease certificates.
The Turkish Treasury on May 29 sold €1bn worth of 364-day EUR- denominated lease certificates to local lenders, the treasury and finance ministry said. The lease certificates will semi-annually pay 1.50% coupons. The issue was executed via the direct sale method and the settlement date is May 31. €1.04bn worth of 728-day EUR-denominated domestic bonds at a semi-annual coupon of 1.55% were sold by the Treasury in January and it sold €916.4mn worth of 364-day EUR-denominated domestic bonds at a semi- annual coupon of 1.10% in March to local lenders via direct sales. The authority also sold €835mn worth of 728-day EUR-denominated domestic lease certificates at a semi-annual coupon of 1.45% in February and €555mn worth of domestic lease certificates at a semi-annual coupon of 1.55% in December to local lenders via direct sales. Consequently, the Treasury has tapped a total of €4.35bn from local lenders via EUR-denominated domestic paper since December. From September to February, the Treasury sold a total of €233.4mn worth of 364-day EUR-denominated domestic bonds at a semi-annual coupon of 1.25% and a total of $184.6mn of USD- denominated domestic bonds at a semi-annual coupon of 2% via public offerings. In September and October, it only managed to raise €10.5mn through 364-day domestic lease certificates at a semi-annual coupon of 1.10% via public offerings. Consequently, the Treasury only borrowed €234mn and $185mn in total from local individuals from September to February.
Gold borrowings. From October 2017 to January 2019, the Treasury borrowed a total of 4.72 tonnes of gold via 728-day gold-denominated domestic bonds at a semi-annual coupon of 1.20% from individual investors while in February 2019 it borrowed 2.23 tonnes of gold via 728-day gold- denominated domestic bonds at a semi-annual coupon of 1% from institutional investors. From October 2017 to January 2019, the Treasury borrowed a total of 4.31 tonnes of gold via 728-day gold-denominated lease certificates at a semi-annual coupon of 1.20% from individual investors while in February this year it borrowed 24.2 tonnes of gold via 728-day gold-denominated lease certificates at a semi-annual coupon of 1% from institutional investors. Consequently, the Treasury borrowed 5.95 tonnes of gold from local individuals while it borrowed 28.5 tonnes of gold from local institutions. From October to March, the Treasury also sold a total of $7bn and €2.75bn worth of eurobonds abroad.
Currently, the Turkish government is solving its FX borrowing shortage and the central bank’s FX reserves dilemma via local lenders.
“Asked” for more bids. The government and local lenders have also struck a bargain to solve the government’s lira borrowing shortage. Private lenders
87 TURKEY Country Report June 2019 www.intellinews.com