Turkey Policy Shift Pays Off With Record Demand at Bond Sale

(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.