Treasury representatives were due to meet leading international institutions in London on 27 January to discuss a possible loan of around $500 million. It would be the first general balance of payments borrowing by the government since the failure of a $1,000 million global bond issue in March last year (MEED 18:3:94).

Letters of invitation to the meeting were issued to around 25-30 institutions by the treasury. JP Morgan, Citibank, Chase Manhattan Bank, Chemical Bank and Bank of Tokyo were included, all banks already holding a strong relationship with Turkey, say bankers. The deal could be in two tranches with an overall maturity of around three years, they add.

The preference will probably be for a syndicated loan rather than a bond issue, say bankers. If it is syndicated, it is likely to be a club deal. One effect of a successful borrowing will be to raise Turkey's standing in the international markets and restore the country to investment grade again. This will pave the way for a return to the international bond markets.

Turkey faces an external debt servicing bill totalling around $12,000 million in 1995, but will probably only require between $1,000 million- 2,000 million in fresh, balance of payments, sovereign borrowing from the international commercial markets, say bankers. Turkey has met its external debt servicing obligations and should continue to do so - foreign exchange reserves excluding gold were at an all-time high of around $8,700 million at 20 January (see above).