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Thursday, September 27, 2007

Turkey Sells $1.25 billion in dollar bonds

According to reuters this morning:

A sale of $1.25 billion in dollar bonds by Turkey suggested some stability was returning to debt markets, although signs of distress from the global credit crunch were still apparent.

U.S. student lender Sallie Mae said a consortium planning a $25 billion leveraged takeover did not expect to complete the deal on the agreed terms.

Sallie Mae's shares closed down 2.7 percent on Wednesday at $45.01 per share, almost $15 below the agreed takeover price as traders bet a lower price would be negotiated for the takeover.

The differing fortunes of Turkey's bond sale and Sallie Mae's takeover underlined the conclusions of the Financial Stability Forum, a global watchdog that met on Wednesday to discuss the credit squeeze that has caused turmoil in global markets.

I am especially interested in the comparative ease with which Turkey has been able to sell these bonds since on 5th September 2007 I argued the following:

This post is about Turkey, and it may be surprising in the light of what I have just said if I now go on to suggest that it is precisely the fact that Turkey may not be so badly ensnared in the trouble which is brewing (I mean no one, but no one, will escape completely scott free) as some other emerging economies (and I am talking here about some key members of the EU10 accession countries, and for reasons explained in this post)which may well be of interest.

The post which follows will be the first of four. Here I will simply look at some currency data, in an attempt to put my finger on the first crack which has appeared in the edifice of emerging market solidity. Later this week I will try to address Turkey's fundamentals as I see them, and explain why I feel there are grounds for some considerable optimism about Turkey's medium term economic future.
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So Turkey is indeed holding its ground while others begin to wilt. Interesting:


Turkey boosted emerging market confidence, selling its bond due in 2018 at a yield of 2.216 percentage points over 10-year Treasuries. That was just above a yield of 2.18 points over Treasuries on 2020 bonds it sold in February.

Enrique Alvarez, an analyst at IDEAglobal, said the sale showed investor hunger for emerging market assets.

"Turkey was also helped by the fact that few countries have issued such bonds since the global credit crunch in July," he said.

To be continued.

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