Turkey: Strong start to 2008 allays funding fears
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CAPITAL MARKETS

Turkey: Strong start to 2008 allays funding fears

The Republic of Turkey, emerging Europe’s most prolific issuer in the international debt markets, made a strong start to 2008 with the reopening of its 2018 6.75% dollar Eurobond for $1 billion.

Gunter Deuber, RZB

"The positive response to Turkey’s debut transaction clearly showed that there is demand for liquid sovereign Eurobonds from emerging market issuers"
Gunter Deuber, RZB

The transaction, now $2.3 billion, was one of several well-received emerging market sovereign Eurobonds to come to market at the start of the year, with Colombia, Indonesia and Mexico also looking to hit the ground running in January. With primary Eurobond markets effectively closed at the end of 2007, Turkey’s tap of a benchmark issue marked an upbeat start to the year for a country that is expected to raise at least $5.5 billion in the course of 2008. Because of volatile market conditions in 2007, Turkey fell $900 million short of its fundraising goal for the year.

However, given strong cash positions and the limited response so far of emerging market spreads to signs of a sharper-than-expected slowdown in the US economy, Turkey managed to attract $2 billion-worth of demand through the reopening, which was lead managed by JPMorgan and Merrill Lynch. Demand from 80 accounts was split 50/50 between domestic and overseas buyers.

"The positive response to Turkey’s debut transaction of 2008 clearly showed that there is demand for liquid sovereign Eurobonds from emerging market issuers – even down the rating scale – while the supply-side gap [lower issuance than redemptions] is helping to stabilize the whole market," says Gunter Deuber, emerging market economist at RZB in Vienna.

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