Turkey Returns to Dollar Bond Market for First Time Since Vote

Beril Akman
·2 min read
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(Bloomberg) -- Turkey is tapping the dollar-bond market for the first time since President Recep Tayyip Erdogan was re-elected in May and embarked on a policy shift in a bid to win back foreign investors.

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The government is offering a five-year dollar sukuk — or Islamic notes — with initial yield talk in the 8.875% area, according to a person familiar with the matter, who is not authorized to speak publicly and asked not be identified.

It will be a benchmark deal, said the person, indicating it will be at least $500 million. The pricing and the size may be finalized later on Tuesday.

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The move comes amid an emerging market-wide rush to market to take advantage of lower yields after a rally in benchmark US Treasuries. That’s been caused by many investors predicting the Federal Reserve is finished with interest rate hikes for this cycle.

Turkey last tapped the dollar market in April, selling $2.5 billion of conventional bonds maturing in 2030 and yielding 9.3%. The price has since risen and they now trade at about 8.6%.

The banks managing the latest bond are Emirates NBD Bank PJSC, HSBC Holdings Plc, JPMorgan Chase & Co., Kuwait Finance House KSCP and Qatar National Bank QPSC. It’s Turkey’s first sukuk in more than a year.

Turkish officials had said they would issue a Eurobond this year to help finance reconstruction efforts in the country’s southeast after devastating earthquakes in February.

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ADQ, a wealth fund of Abu Dhabi, will buy as much as $8.5 billion of bonds that plan to be issued before the end of this year, Turkish Finance Minister Mehmet Simsek had said. It is not clear whether the dollar sukuk is part of the quake reconstruction efforts.

The Turkish Treasury Ministry has sold $7.5 billion of debt so far this year in international markets. That’s 75% of its target for this year of $10 billion.

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