Turkey begins marketing Samurai bonds

TOKYO / ISTANBUL

A bank teller counts 10,000 yen banknotes in Tokyo in this file photo. AFP photo

Turkey started marketing the sale of 10-year Samurai bonds planned for March 8, according to a person with direct knowledge of the matter.

The bonds will be priced to yield between about 35 basis points and about 45 basis points more than the yen swap rate, said the person, asking not to be identified as the information is private. The bonds will be guaranteed by the Japan Bank for International Cooperation, the person said. The Treasury last tapped Japan’s market in March 2011 with a 180 billion yen ($2.2 billion) sale of 10-year bonds at a yield of 187 basis points, or 1.87 percentage point, which was equivalent to 48 basis points more than the benchmark yen swap rate.

Turkey is now looking to sell $1 billion of the bonds, according to a person with knowledge of the issue who declined to be identified.

Turkey’s international bonds are rallying this year on confidence the world’s second-fastest growing major economy behind China last year will keep expanding after cuts in interest rates reversed a policy of monetary tightening.

The Samurai sales are part of a foreign borrowing program to raise 9.5 billion liras ($5.4 billion) this year to help finance a budget deficit equal to 1.5 percent of gross domestic product and a current-account deficit that hit $77 billion in 2011, the highest in the 34-nation Organization for Economic Cooperation and Development after the U.S. and Italy.

Turkey needs to repay $3.4 billion in capital and interest on external debt in the first quarter out of a total $10.5 billion for the whole year, according the Treasury’s debt- management report published last month.