Treasury Borrows 104.1 Billion Lira Through Two Auctions

The Turkish Ministry of Treasury and Finance successfully borrowed a total of 104 billion 72.2 million lira from the markets through two separate auctions held on Monday, June 15. This borrowing was conducted via a zero-coupon treasury bill and a re-issuance of a fixed-coupon government bond. The auctions were met with strong demand, indicating market interest in the Treasury's financing strategies.

In the first auction, the initial issuance of an 8-month (238-day) zero-coupon treasury bill was carried out. The simple interest rate for this auction was determined as 39.71%, with a compound interest rate of 42.33%. Total nominal bids reached 92 billion 542.4 million lira, while nominal sales amounted to 27 billion 366.6 million lira, and net sales were 21 billion 726 million lira. All bids from the public sector, totaling 24 billion 150 million lira, were met, and 26 billion lira was sold to market makers against their 58 billion 200.2 million lira bids.

The second auction involved the re-issuance of a 2-year (637-day) fixed-coupon government bond, offering a 18.40% coupon payment every six months. The simple interest rate for this auction was 38.27%, and the compound interest rate was 41.93%. Nominal bids reached 22 billion 769 million lira, with nominal sales of 7 billion 97 million lira and net sales recorded at 7 billion 596.2 million lira. The entire 20 billion 600 million lira in bids from the public sector was met, and 4 billion lira was sold to market makers from their 8 billion 324.9 million lira bids.

With these auctions, the Ministry of Treasury and Finance successfully completed a total borrowing of 104 billion 72.2 million lira, including non-competitive (ROT) sales conducted before the auctions. This borrowing was met with strong market demand, highlighting investors' interest in Turkish Lira-denominated debt instruments despite high interest rates. In particular, in a high-inflation environment, investors are turning to instruments that offer returns exceeding inflation expectations. While this supports the Treasury's ability to meet its financing needs, it also indicates that high borrowing costs continue to exert pressure on the budget.

This borrowing is part of the Ministry of Treasury and Finance's three-month domestic borrowing strategy for the June-August 2026 period. The Ministry aims to borrow a total of 543.8 billion lira against 555 billion lira in maturities during this period, projecting a rollover ratio of 98%. The high interest rates are seen as a reflection of the tight monetary policy implemented by the Central Bank of the Republic of Turkey (CBRT) in its fight against inflation and the ongoing disinflation process. Such auctions are critically important for maintaining sound public finance and preserving budget balance.

Market analysts view the Treasury's continued borrowing at such high interest rates as an expected outcome under current economic conditions. The persistence of high inflation and the expectation of a continued tight monetary policy stance keep bond and bill yields elevated. In the upcoming period, progress made in the disinflation process and developments in global markets will be the main factors influencing the Treasury's borrowing costs. Investors are expected to maintain their interest in new instruments issued by the Treasury, driven by inflation expectations and the search for real returns.