Turkey to seek $5 billion on global bond markets

ISTANBUL – Turkey said yesterday it would seek $5 billion on international bond markets in 2004, and analysts believe the Treasury will easily find interested buyers after a successful dollar bond auction already this year. Turkey launched a new 30-year dollar benchmark bond on January 7, raising $1.5 billion amid high investor interest and upbeat sentiment about the emerging market’s recovery from a 2001 financial crisis. «Demand has been really high. I don’t see Turkey having any problems borrowing the $5 billion this year,» said Simon Quijano-Evans of Bank Austria Creditanstalt in Vienna. The Treasury also said in a statement detailing its 2004 targets that it aims to service some 192,500 trillion lira ($142.5 billion) of debt in 2004. Of that, 175,800 trillion lira would be domestic debt and 16,700 trillion foreign debt. In 2003, debt service amounted to 161,600 trillion lira, made up of 145,300 trillion in domestic debt and 16,400 trillion lira in foreign debt. At the end of September, the latest available data, foreign debt stock stood at $142 billion. Turkey is working to reduce that massive debt load under a multibillion-dollar loan deal with the International Monetary Fund (IMF). The Treasury also said it could move forward external financing due in 2005 to 2004 if market conditions were right. The IMF in August extended repayments of about $11 billion Turkey owes the fund to 2004 and 2005. «We expect the IMF this year or next to spread out (repayments) more evenly if the government sticks to the reform package,» Quijano-Evans said. Turkey is due to pay back $9.5 billion from eurobonds and IMF loans this year, $11.5 billion next year and around $14.2 billion in 2006, Quijano-Evans said. Turkey is looking to raise some 1,600 trillion lira ($1.19 billion) from privatizations in 2004, the statement said. Last year, the country carried out selloffs worth $893 million, falling well short of a $4 billion target and disappointing expectations for a program which is at the heart of the IMF accord. «It’s not clear if the Treasury is just being cautious (with the privatization target). It might also be one reason for their $5 billion eurobond target,» said Quijano-Evans. The government has also recently promised hikes in state pensions and the minimum wage that go beyond 2004 inflation targets, while vowing to lower value-added taxes. Analysts have said the wage and pension increases will pose 3,500 trillion lira in extra costs on the budget. The government has said it will cut spending, but analysts believe it may also have to borrow to raise the funds.

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