Bankers favour short-term April Turkey debt issues

By Asli Kandemir

ISTANBUL, March 21 (Reuters) - Bankers said on Friday they are in favour of the Turkish Treasury issuing short-term bonds and floating rate notes in April given global market woes and rising political uncertainty at home.

According to data provided by bankers, the Treasury will face domestic debt redemptions to the market of 12.55 billion lira ($10 billion) in April, with the biggest redemption being 10.9 billion lira on April 9.

"Banks generally want the Treasury in the April borrowing programme to issue paper attractive for (retail) clients. They want it to be paper which they can carry in their portfolios before the closing of balance sheets on March 31," said one banker, who declined to be identified.

"In this context, there could be a two-year floating rate note (FRN) with a quarterly coupon," the banker said.

Turkish financial markets have been hit hard by the volatility in global bourses as a credit crunch hits the world's banks, claiming Bear Stearns BSC.N as its biggest victim.

Investors have also been deterred by fears of political instability in Turkey after a top prosecutor last week asked the Constitutional Court to close the ruling AK Party for allegedly trying to build an Islamic state in secular Turkey.

The AK Party, which has Islamist roots, denies the charges.

Turkish bonds have weakened, with the yield on the Oct. 7, 2009 benchmark bond <0#TRTSYSUM=IS> rising to 18.30 percent on Friday from 17.71 percent a week earlier. At the end of last year the benchmark bond yield was 16.59 percent.