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Turkey improves after rate hike; Saudi Arabia, African Development Bank tap market
By Rebecca Melvin
New York, Sept. 13 – Turkey’s sovereign and corporate bonds improved on Thursday after the country’s central bank raised interest rates by 625 basis points to combat rising inflation. The central bank move also helped the Turkish lira.
Turkey’s sovereign curve tightened by 45 bps to 60 bps, a London-based trader said.
The Turkish central bank raised its main rate to 24% from 17¾%, citing concerns over rising inflation.
Not only did Turkey improve, but the spectrum of EM debt was firmer overall.
The Kingdom of Saudi Arabia, acting through the Ministry of Finance, priced a $2 billion 10-year sukuk, or Islamic bond, at 99.997 for a yield of 4.304%, or spread of mid-swaps plus 127 bps, according to a syndicate source on Thursday.
The new Saudi sukuk added about 0.25 point in first-day trading, quoted at 100.25 bid, 100.30 offered and pushing its spread to 123 bps on the day.
At pricing, the sukuk’s spread over U.S. Treasuries was 134.1 bps.
African Development Bank also priced a deal, and the deal size was also $2 billion. The multilateral lender priced 3% five-year global Securities and Exchange Commission-exempt bonds at 99.811 for a yield of 3.041%, or a spread of mid-swaps plus 5 bps. That pricing was 2 bps tighter than initial talk.
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