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Cablegate: Turkey's Economy: Good Treasury Bond Auctions

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS ANKARA 000494

SIPDIS


SENSITIVE


STATE FOR E, EB/IFD/OMA AND EUR/SE
TREASURY FOR OASIA - MILLS AND LEICHTER
STATE PASS USTR - NOVELLI AND BIRDSEY


E.O. 12958: N/A
TAGS: ECON EFIN PREL TU
SUBJECT: TURKEY'S ECONOMY: GOOD TREASURY BOND AUCTIONS

Sensitive but Unclassified. Not for internet distribution.


1. (U) On January 21, Turkish Treasury auctioned a one-year
fixed rate bond and a two-year floating rate bond today to
strong demand, in advance of a January 22 debt redemption to
the market of TL 5.4 quadrillion (about $3.5 billion).
Treasury sold:


-- a total of TL 3.2 quadrillion of the one-year bond
(including about TL 2.7 quad or $1.65 billion to the market)
at a 58.5 percent compounded yield;


-- a total of TL 0.33 quadrillion of the two-year, floating
rate bond (including TL 275 trillion or $165 million to the
market).


2. (SBU) Today's auction results, together with TL 1.5
quadrillion (about $900 milllion) raised in the auction of a
three-month bill auction January 20 and residual cash
account, will be sufficient to meet Treasury's $3.5 billion
redemption January 22.


3. (SBU) Comment: After today's auction results, Turkish
market participants are breathing a sigh of relief, but not
expecting a market rally. Yapi Kredi executive VP Huseyin
Imece told us the markets remain concerned about both Iraq
and the GOT's relations with the IMF, with the latter being
the biggest concern.


4. (SBU) Relations with the IMF remain on hold, pending GOT
delivery of the LOI and adoption of the fiscal measures
suggested by IMF staff. The GOT received and understood IMF
Deputy MD Anne Krueger's tough message on economic reforms,
according to Dogan Holding CEO Darbaz, who briefed us
following a round of meetings in Ankara January 22 (Darbaz
said State Minister Babacan delivered this message to AK
Chairman Erdogan). IMF resrep told us he expects to receive
the LOI this week.
PEARSON

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