ISTANBUL: Turkiye has entered the international bond market for the third time this year, capitalising on increasing investor confidence as inflation starts to slow and the economic outlook improves.
The country is seeking to raise eight-year US dollar debt with an initial yield guidance of around 7.625%, according to a person familiar with the matter.
The pricing and the size may be finalised soon.
The deal is likely to be a benchmark type, meaning at least US$500mil.
BNP Paribas SA, Citigroup Inc, JPMorgan Chase & Co and Standard Chartered Plc are the banks managing the sale.
The likely final pricing of 7.23% to 7.3% would be “a reflection of potential strong demand supported by technicals and the fundamental picture,” Morgan Stanley’s Neville Mandimika said in a note to clients.
Mandimika said a range of factors were “supportive of the sovereign”, from the government’s decision to skip a mid-year minimum wage hike and a faster-than-expected slowdown in inflation to a potential rating upgrade by Moody’s Investors Service this month.
Turkiye has said it plans to borrow US$10bil from international markets through conventional bond and sukuk, or Islamic debt, issuances this year.
In March, it raised a €2bil (US$2.2bil) bond, its first in euros in about three years. That followed a month after a US$3bil 10-year deal with a yield of 7.875%.
The latter notes are now trading above par, with the yield at 7.38%.
Investor confidence in Turkiye has grown over the past year following a policy reversal that’s put the country on a more conventional monetary and financial track.
President Recep Tayyip Erdogan’s government and the central bank are trying to tame inflation that’s above 70%, one of the highest levels in the world.
Interest rate hikes and spending cutbacks are expected to cool inflation to around 40% by the end of this year. — Bloomberg
