Turkish Treasury’s borrowing costs rise in debt auctions.

By bne IntelliNews March 5, 2014

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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