Turkey raises $2bn from 5-year eurobond yielding 7.5%

Turkey raises $2bn from 5-year eurobond yielding 7.5%
By Akin Nazli in Belgrade October 17, 2018

The Turkish Treasury has raised $2bn from a USD-denominated eurobond due December 2023 with a coupon rate of 7.25% and a yield to the investor of 7.50%, the authority said on October 17 in a written statement.

Initial expectations for the yield stood at around 7.75%, according to unnamed banking sources, Reuters reported on October 16 citing the International Finance Review (IFR).

The spread over US bonds reached 447.5bp at the auction, marking a jump from 336.8bp in the April auction and 266.7bp in the January auction.

The offering attracted an orderbook of more than three times the actual issue size. Some 60% of the bonds have been sold to investors in the US, 23% in the UK, 11% in Other Europe, 5% in Turkey, and 1% in Other Regions.

“Sound economic fundamentals”
“[The auction] clearly reflected that Turkey’s sound economic fundamentals, solidity against external shocks, impacts of policies and measures we have accomplished were profoundly welcomed by investors,” Turkish President Recep Tayyip Erdogan’s son-in-law and Treasury and Finance Minister Berat Albayrak said in a press release.

Albayrak also underlined that the orderbook of more than three times the actual size of the offer was important to demonstrating market and investor confidence in Turkey’s solid economic and financial indicators in a period where there are high fluctuations observed in th global financial system.

“The auction results also reflected that the soundness of Turkey’s economic fundamentals, its solidity against external shocks and the success of our recently applied measures that we stressed at meetings we have held with investors for a long time have been affirmed by investors,” Albayrak also said.

So far this year, Turkey has raised a total of $6bn from international markets while it plans $6.5bn worth of eurobond issues in all across 2018.

In April, the Treasury issued $2bn worth of 10-year eurobonds at an annual cost of 6.20% against three-times-higher demand.

In January, the Treasury raised $2bn via 10-year bonds but at the lower cost of 5.20%.

“Turning point”
“Government will want to see this as a turning point in the crisis and benchmark for corporates and banks to come to market to secure dollar liquidity,” Timothy Ash of Bluebay Asset Management said in an e-mailed comment.

State-owned energy firm Bulgarian Energy Holding (BEH) said earlier this month it has for the second time reopened its latest eurobond issue, raising another €50mn with an annual coupon of 3.5%.

Romania raised €1.75bn of funds with two eurobonds issued on October 4, with maturities of 10 years at a 3.029% yield and 20 years at a 4.234% yield.

Albania successfully placed a seven-year eurobond worth €500mn at a coupon rate of 3.5% on October 2, the third time the country has tapped the international money markets, Albanian Finance Minister Arben Ahmetaj said.


Turkish Treasury's eurobond Issues in 2018
Issue Date Currency Size Maturity Date CouponRate (%) Price
Yield to Investor
Yield to Investor (Spread)
17.01.2018 USD 2 billion 17.02.2028 5.125 99.411 5.2 UST + 266.7 bp
24.04.2018 USD 2 billion 24.10.2028 6.125 99.427 6.2 UST + 336.8 bp
23.10.2018 USD 2 billion 23.12.2023 7.25 98.917 7.5 UST + 447.5 bp
source: treasury