Selling in the Turkish lira has ricocheted into the country’s bond market, sending the yield on the local currency 10-year bond back above 20 per cent.
Just after trading opened in Istanbul, the benchmark 10-year yield shot up 84 basis points (0.84 percentage points) to 20.58 per cent, according to Bloomberg data. It marked an all-time peak for that type of issuance and brought it above the high it reached on Tuesday.
Dollar denominated debt, which has been steadier since it is not directly vulnerable to the slide in the lira, was also under pressure.
Yield on the 10-year paper maturing in October 2029 jumped 24.7 basis points (0.247 percentage points) to 7.92 per cent, according to Bloomberg data. Another 10-year bond maturing in February 2028 faced a 26 bps rise in yield to 7.84 per cent.
In another sign of investor angst, the price to hedge against a default on Turkish debt by using instruments called credit default swaps (CDS) rose to its highest level since 2009. The 5-year CDS spread reached 400 bps, according to Bloomberg data.
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