Turkey’s Treasury was forced to pay higher than expected borrowing costs in the debt auctions it held on Tuesday due to international geopolitical concerns and domestic political tension. It borrowed a total of TRY 8.7bn (EUR 2.9bn) on Tuesday, selling 2-year and 10-year fixed-coupon bonds as well as 7-year floating rate notes.
The Treasury sold TRY 1.79bn of the benchmark 2-year paper (re-issue) at a yield of 11.33% versus a market consensus forecast of 11.20%. Non-competitive sales amounted to TRY 1.26bn and demand for the bond stood at TRY 4.9bn. For comparison, the Treasury’s borrowing cots was 11.18% at an auction it held in February for a similar 2-year fixed coupon.
Sales of the 10-year bond (re-issue) stood at TRY 1.62bn at a yield of 10.81%, slightly above the forecast of 10.73%. The Treasury also sold TRY 1.3bn of the paper to primary dealers. Demand for the 10-year bond was TRY 4.46bn.
The Treasury also sold TRY 2.7bn of 7-year floating rate notes at the yield of 9.11% and non-competitive sales amounted to TRY 2.3bn.
Consequently, the Treasury has raised a total of TRY 15.2bn through five auctions it has held this month ahead of its TRY 16.7bn of domestic debt redemption on Wednesday.
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