Istanbul - Turkey filed an application in the US to sell as
much as $8 billion in debt, according to a prospectus posted on the US
Securities and Exchange Commission’s website.
The new prospectus is a technical update to the US regulator
and doesn’t indicate a target for sales, the Ankara-based Treasury said by
email. Turkey had filed a prospectus to offer as much as $8
billion in debt securities in November, according to a previous filing on the
SEC website.
The government has sold $6.25 billion of foreign currency
debt in 2017, already exceeding the full-year $6 billion target. It has
increased spending to bolster growth, and policy makers have said they may miss
their 1.7 percent budget deficit target this year by as much as 1 percentage
point.
Meanwhile, analysts say domestic borrowing plans through
July suggest lira debt sales will exceed redemptions this year for the first
time since 2009. So far the fiscal slippage isn’t yet enough to spook the bond
market, which has seen a surge in foreign demand after the central bank’s
efforts to stem lira declines sparked a currency rally and drove yields above
11 percent, creating one of the world’s top carry-trade opportunities.
The government debt-to-GDP ratio was around 30 percent at
the end of 2016, about half its level a decade ago and comparing favourably
with most emerging markets.
Read also: R9bn to fund Life Healthcare purchases
The time may be right for Turkey to borrow abroad, said
Dmitri Barinov, a money manager at Union Investment Privatfonds GmbH in
Frankfurt, citing calm in markets and a decrease in the cost of Turkey’s credit
default swaps. “The newly issued Turkey ’47 is trading at highs in price,
so seems like markets like the credit right now.”
Turkey’s dollar bond due May 2047, issued earlier this month
with a coupon of 5.75 percent, traded at 99.07 as of Friday, up from a low of
95.8 two weeks ago. The cost of insuring the nation’s debt against default for
five years using credit default swaps was below 200 basis points, the lowest in
more than two years.