Turkey Policy Shift Pays Off With Record Demand at Bond Sale

An empty highway during weekend curfew in the Levent district of Istanbul, Turkey, on Saturday, Dec. 5, 2020. Weekend curfews start at 2100 on Fridays and end at 0500 on Mondays, with weekday curfews 0900-0500, as new coronavirus cases hover at about 30K per day. Photographer: Kerem Uzel/Bloomberg
An empty highway during weekend curfew in the Levent district of Istanbul, Turkey, on Saturday, Dec. 5, 2020. Weekend curfews start at 2100 on Fridays and end at 0500 on Mondays, with weekday curfews 0900-0500, as new coronavirus cases hover at about 30K per day. Photographer: Kerem Uzel/Bloomberg

(Bloomberg) -- Turkey attracted record demand for its first Eurobond sale of the year, raising $3.5 billion via a two-part offering of dollar-denominated securities.

Demand for the securities was more than $15 billion, an all-time high for a Turkish issuance in international capital markets, the country’s Treasury said in a statement.

The nation sold $1.75 billion of debt maturing in 2026 at a yield of 4.9%. That compared with initial price talk of 5.25%, according to a person familiar with the matter. The government also sold the same amount of notes due 2031 at 5.95%, down from a pre-sale guidance of 6.25%, said the person.

Turkey joined the cohort of junk-rated borrowers looking to take advantage of low interest rates and investors’ hunger for yield as they seek to cushion the blow to their budgets from the coronavirus pandemic.

A turn toward market-friendly policies last year is also attracting foreign funds. The latest sale was more than four times subscribed, compared with a multiple of three at an offering in October.

The “Eurobond sale in October had been a difficult one but change in economic management and following normalization steps have shifted Turkey sentiment to positive,” said Kaan Nazli, a money manager at Neuberger Berman in The Hague.

Turkey’s dollar bonds returned 12.6% in the fourth quarter, more than double the average among developing-nation sovereign debt. The government plans to borrow $10 billion from global debt markets this year.

Citigroup Inc., Goldman Sachs Group Inc. and JPMorgan Chase & Co. managed the sale.