Turkey’s Treasury on January 7 raised $3.5bn from the sale of two eurobonds, the finance ministry said on January 8.

A seven-year $2bn paper (US900123DT49) will pay a 6.30% coupon and offers a yield-to-investor of 6.35% (priced at 99.726). A 12-year $1.5bn paper (US900123DU12) carries a coupon rate of 6.875% at a yield-to-investor of 6.90% (priced at 99.798).

Abu Dhabi Commercial Bank, BNP Paribas, Citigroup, Goldman Sachs and Standard Chartered Bank acted as intermediaries in the deals.

Turkey’s CDS, meanwhile, is testing the 200-level, while the yield on the Turkish government’s 10-year eurobonds remains below the 7%-level.

Turkey currently has a BB-/Stable rating (at three notches below investment grade) from Fitch Ratings, a Ba3/Stable (at three notches below investment grade) from Moody’s Investors Service and a BB-/Stable (at three notches below investment grade) from S&P Global Ratings.

Spreads fall further

The spreads over US Treasuries fell further to 245bp in the seven-year paper and 276bp in the 12-year paper from the 281bp seen in the previous auction held for an 11-year paper (US900123DS65) in November.

Prior to the appointment of the country’s current economy management officials in June 2023, 500-600bp spreads were observed.

Turkey’s return to economic "orthodoxy" is one factor in securing the country lower bond spreads, but there are presently sharp declines across EM spreads that amount to a global phenomenon. The spreads in the EM papers have lately approached zero.

“Manic” market

Bankers expect the “manic” January of this year in the CEEMEA eurobond markets to extend the eurobond sales record set in January 2025, according to Global Capital.

Turk Eximbank in the market

Government-run Turk Eximbank was on January 8 also in the market to collect bids for a five-year paper (XS3269561554 - US90015LAM90). The initial price guidance was at 6.75%. It was expected to tighten further.

Abu Dhabi Commercial Bank PJSC, BBVA, Citigroup Global Markets Limited, Deutsche Bank AG’s London Branch, Emirates NBD, First Abu Dhabi Bank PJSC, ING Bank N.V., MUFG Securities EMEA Plc., SMBC Bank International Plc, Societe Generale and Standard Chartered Bank were acting as intermediaries in the bookbuilding.

In September, Eximbank sold $600mn of a five-year eurobond (XS3183303018/US90015LAL18) at a coupon rate of 6.375% and a yield-to-investor of 6.50% (priced at 99.469).

Eximbank has a BB-/Stable rating from Fitch Ratings and a Ba3/Positive from Moody’s Investors Service.