Debt prices edge up in Turkey but stocks fall

ISTANBUL – Turkish debt prices edged up yesterday after the state treasury successfully raised new funds in a debt sale, but stocks fell over worries about regional stability. The treasury reissued a total net 3,083 trillion lira (some $2.2 billion) in two debt papers on Tuesday, raising just enough to cover a looming 3,090-trillion-lira debt repayment as it wrestles to manage its crisis-hit economy’s mountain of debt. Market players welcomed the auction result, noting the treasury had opted to meet only 43 percent of nominal bids for the longer-term papers. «The auction went well. It shows that the treasury does not want to borrow at high rates over the long term,» said Cem Kurdoglu, treasury group director for Denizbank. He said the market now had expectations of a further central bank cut in lending rates, following data showing that inflation began to slow in February. Yields on the shorter term of the two auctioned papers maturing on August 28 fell to 69.46 percent on the secondary market after the auction, compared to their sale yield of 69.80 percent. The longer-term February 5, 2003 papers traded flat at 68.36 percent on the secondary market, compared to an auction yield of 68.30 percent. The treasury met 67 percent of nominal bids for the 175-day paper and only 43 percent of nominal bids for the 336-day paper. It sold a net 1,578 trillion lira of the short-term bills and 1,505 trillion lira of longer-term papers. Turkey’s recent $16-billion IMF lending pact aims to cut the cost of borrowing and reduce the size of Turkey’s domestic debt load. An IMF inspection team was expected in Turkey late yesterday for a first look at progress under the three-year pact. The main share index in Istanbul closed the day 2.11-percent lower at 11,418.64 points, with brokers saying worries that the USA is gearing up to attack neighboring Iraq had outweighed any economic optimism. The lira currency was steady, trading largely unchanged at 1,378,000 to the dollar on the independent interbank market.

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