Markets wobble prompt Turkey sovereign fund, Ukraine's Naftogaz to delay dollar bond sales

Credit: REUTERS/VALENTYN OGIRENKO

Turkey's sovereign investment fund postponed its international bond debut on Tuesday and Ukraine's Naftogaz put its dollar debt sale on ice indefinitely, as volatile markets in the run-up to the U.S. presidential election drove up borrowing costs.

By Abhinav Ramnarayan and Ebru Tuncay

LONDON/ISTANBUL, Oct 20 (Reuters) - Turkey's sovereign investment fund postponed its international bond debut on Tuesday and Ukraine's Naftogaz put its dollar debt sale on ice indefinitely, as volatile markets in the run-up to the U.S. presidential election drove up borrowing costs.

The Turkey Wealth Fund - which oversaw $240 billion in assets last year and whose chairman is President Tayip Erdogan - told Reuters the fund had postponed its planned dollar-denominated bond issue "due to market conditions".

Turkey's government sold $2.5 billion of Eurobonds in early October, in a move some predicted could smooth the path for more debt issuance from the country.

A lead banker on the deal said the decision not to come to the market now had been taken after receiving investor feedback.

"They just wanted to gauge what kind of premium to the sovereign they would have to come," the banker said, with both the political and markets backdrop playing a part in the decision.

"There is a trade available, but not an optimal trade; they are just going to wait a little bit more - they will revisit next year when it's a bit more constructive," the banker added.

Turkish assets have been in the cross hairs in recent months due to a cocktail of geopolitical tensions with Washington, Brussels and Moscow, as well as negative real rates, high inflation and badly depleted FX reserves which has sent the lira tumbling more than 24% since the start of the year.

Meanwhile Ukraine's Naftogaz postponed its dollar-denominated Eurobond offering indefinitely, citing negative market conditions, the company's press service said.

"The placement's timing was far from ideal," said Alexander Paraschiy at Concord Capital, adding that postponing the deal looked logical from both a financial and a political perspective.

"There is a chance that next spring, the conditions for placement could be more favorable," Paraschy said, though he added the delay was negative for the Ukrainian firm's mid-term liquidity outlook.

(Reporting by Abhinav Ramnarayan in London and Ebru Tuncay in Istanbul, additional reporting by Pavel Polityuk in Kyiv, writing by Karin Strohecker Editing by Gareth Jones)

((karin.strohecker@thomsonreuters.com; +442075427262; Reuters Messaging: karin.strohecker.reuters.com@reuters.net))

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