The Republic of Turkey made a swift return to the bond markets on Monday — selling a lightning Eu350m tap of its Eu650m 4.75% July 2012 bond, originally launched in June.
Dresdner Kleinwort Wasserstein and JP Morgan won the mandate late on Monday morning and announced the sale just before 1pm.
Investors flocked to the bond, resulting in a book of over Eu600m when the leads closed it at around 3.30. They priced the notes above par at around 4.30pm to yield 4.727%, or 154.1bp over the 5% July 2012 Bund.
The tap raises the bond to a round Eu1bn and furthers the prefunding for 2006 that Turkey started with an equally speedy $750m tap in November.
That deal increased the republic's $1.5bn 7.25% March 2015 bond to $2.25bn.
The November deal completed Turkey's $5.5bn international borrowing programme for 2005 and added $550m to the government's coffers for next year.
Carlyle Peake, global head of credit and emerging market debt syndicate at Dresdner Kleinwort Wasserstein in London, said the reopening of the 2012 was very smooth and swift and that Turkey was one of few sovereigns in Europe, the Middle East and Africa that could attract such rich demand at the drop of a hat at this time of year.
The oversubscribed book comprised 50 orders, with around two thirds of the deal sold outside Turkey, and particularly strong participation from the UK, where investors bought 19%. Germany and Austria took 9%, the Benelux 7%, Italy 5%, US offshore 5%, Asia 8% and others 13%. Turkish investors bought 34%.
One syndicate official away from the leads said it was a well-managed deal that traded up 15 cents on the break.
"It was the only trade left that made sense for the borrower, which probably felt disappointed that it did not do the whole billion back when the bond was launched in June," said the banker. "That's the one deal I've been pushing the borrower for."
Turkey's central bank said on Wednesday that the country's current account deficit was $884m in October, and totalled $17.114bn for the first 10 months of the year. In October 2004 Turkey's deficit was just $185m.
Investors expect the central bank to cut interest rates for the ninth time this year today (Friday), after November inflation data released last week showed a drop in producer price pressure.
Turkey's central bank borrowing rate is 13.75% and the lending rate 17.75%.