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By Robert Hogg
LONDON, May 4 (IFR) - Turkey has opened books for its first
bond deal since last month's referendum on the constitution
granted President Erdogan sweeping new powers.
The sovereign released initial price thoughts for a US
dollar benchmark-sized bond due May 2047 at 6.125% area,
according to a lead.
Bankers away reckon the bond is coming about 25bp-30bp back
of fair value.
Turkey's 6.625% February 2045 notes - its longest-dated
outstanding notes - closed on Wednesday at a yield of 5.67% or
Z-spread of 322bp, according to Tradeweb. The new bonds are
being marketed at a spread of about 359bp over mid-swaps.
One investor expects the issue to attract a lot of interest,
despite some concerns over the country's economics.
"I think they have made much less progress than most other
[emerging market sovereigns] in recent structural reform," said
Oliver Weeks, economist at Emso Asset Management. "Fiscal policy
is loosening significantly preventing any improvement in the
current account. Credit policy is also loosening though short
term liquidity has been kept relatively tight.
"But they have fiscal room and the external environment is
supportive for now, with the Eurozone doing well and commodity
prices weakening," he said.
This will be Turkey's fourth deal in the US dollar market
this year, including a sukuk. The sovereign has raised US$4.5bn
The deal is today's business via Citigroup, Deutsche Bank
and Goldman Sachs.
The sovereign is rated Ba1 (negative) by Moody's and BB+
(stable) by Fitch.
(Reporting by Robert Hogg; editing by Sudip Roy)