The treasury launched a DM 300 million ($216 million) Eurobond on 24 July, but immediately increased the value to DM 500 million ($360 million) after the US ratings agency Standard & Poor's upgraded its outlook for the Turkish economy (see above). The lead manager is Commerzbank.

The bond has a maturity of three years with an 8 per cent coupon, and a fixed re-offer price of 99.25 per cent. Placements on the first day went to retail and institutional investors in Germany, Switzerland, Benelux countries and Japan, banking sources say. This is the first Deutschemark- denominated Eurobond since October 1993, when the government raised DM 1,000 million ($721 million).

The latest Eurobond could be increased further depending on demand, according to Aydin Karaoz, director-general of foreign economic relations and in charge of Turkey's external borrowing at the treasury.

'We aren't trying to squeeze every last penny from the market,' Karaoz said on 25 July. The treasury's main aim this year is to re-establish confidence in Turkish paper, rather than maximising borrowing potential, he said. 'We do not want to give a wrong signal to the markets.'

The Deutschemark Eurobond, along with a Y 70,000 million ($789 million) Euroyen bond signed in the week ending 21 July, were originally planned for the autumn, but the treasury brought the issues forward because of improved market conditions, Karaoz said. No new issues are expected in August.

With the DM 500 million ($360 million) Eurobond signed, the treasury will have raised most of the fresh borrowing requirements of about $2,000 million for 1995 to finance the balance of payments. However, bankers say a further $500 million might still be needed.