Turkey bonds fall, lira weakens amid sanctions; Eskom sets yields on dual tranche deal

By Rebecca Melvin

New York, Aug. 2 – Turkey’s bonds, as well as the country’s stocks and the Turkish lira, plunged on Thursday after the United States sanctioned two Turkish government ministers over the detention of American pastor Andrew Brunson and the government of President Recep Tayyip Erdogan responded defiantly, according to market sources.

The yield on Turkey’s 10-year bonds blew out by some 89 basis points, and the lira fell to an all-time low of 5.092 to the U.S. dollar.

The United States said it would move to prevent Americans from doing business with Turkey’s ministers of justice and interior because the country has refused to free Brunson, who has been imprisoned since 2016 on what the United States asserts are politically motivated charges related to aiding in a failed coup attempt. If convicted, Brunson faces up to 35 years in prison.

The sanctions on the justice minister, Abdulhami Gul, and interior minister, Syleyman Soylu, were condemned by the Turkish foreign ministry, which said they were the “wrong decision” and should be reversed.

U.S. officials have said Brunson’s case is politically motivated because Erdogan is seeking to have Islamic cleric Fethullah Gulen, who allegedly incited the coup attempt, repatriated to Turkey from Pennsylvania.

Also in focus among emerging markets debt investors was pricing of South Africa’s Eskom Holdings SOC Ltd.’s $1.5 billion of dual 10-year tranches.

The yields were set at 6.35% for the $1 billion of 10-year notes guaranteed by the South African government and at 8.45% for the $500 million of non-guaranteed 10-year notes.

Eskom’s existing 5¾% notes due 2021 were lower on Thursday trading at 98.24, which was off 0.1% on the day, and retracing some gains notched at the end of July.

In the broader markets, U.S. Treasuries yields slipped on Thursday after a multiweek high notched on Wednesday and ahead of U.S. jobs data for July expected on Friday. The yield on the 10-year Treasury benchmark fell to 2.985% from 3.003% late Wednesday.

© 2015 Prospect News.
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