Treasury jumps at the bond sale wagon

Bloomberg

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"This sale was very successful considering this environment in which even Germany has problems," said Levent Güven, head of currency trading at Turkish Economy Bank, or TEB, in Istanbul. Germany’s sale of 10-year bonds attracted the least demand in six months Wednesday.

The Philippines also sold $1.5 billion of bonds, a day after Brazil and Colombia each tapped international markets for $1 billion. Brazil and Colombia each sold $1 billion of bonds Tuesday and Chile said it may also tap international markets. .

"There is hunger for top sovereign credits among asset managers," said Luis Costa, an emerging-markets debt strategist at Commerzbank in London.

The extra yield investors demand to own developing nations’ bonds instead of U.S. Treasuries has fallen 55 basis points since Jan. 1 to 6.35 percentage points, and reached an eight-week low of 6.29 percentage points yesterday, according to JPMorgan Chase & Co.’s EMBI+ Index.

Turkey’s sale will be benchmark in size, the person said. Benchmark typically means at least $500 million. Costa said he expects the sale to raise about $1 billion.

Turkey plans to borrow 5.6 billion Turkish liras ($3.7 billion) on international markets this year, less than in 2008, as the global crisis makes it harder and more costly for developing economies to obtain credit. The country last sold $1.5 billion of dollar bonds due in 2019 on Sept. 4, with a coupon of 7 percent.

Turkey’s bonds are rated Ba3, or three steps below investment grade, by Moody’s Investors Service, and an equivalent BB- by Standard & Poor’s.