The Turkish Treasury sold a total net 4.9 billion liras ($3.1 billion) by selling two-year benchmark bonds and five-year bonds at lower yields due to stronger demand from major local banks.

The Ankara-based Treasury sold a net 1.65 billion liras of the February 2013 bonds at an average yield of 8.30 percent at an auction Tuesday, the Central Bank said.

It also sold 2.22 billion liras in an earlier non-competitive sale to so-called “primary dealers” made up of major banks and public institutions. The yield fell from 8.88 percent in the first auction of the benchmark on April 12 when the Treasury borrowed 3.88 billion liras, according information on the Central Bank’s website.

“The yield in the benchmark auction was lower than expected because of extra demand from primary dealer banks which need to meet their quotas,” Turgut Keleş, WestLB’s chief of local-market trading in Istanbul, said in a phone interview. “Thus bond sales by local banks increased after the auction. The yields may stay within a range of 8.25 percent to 8.50 percent in the short term.”

Two-year benchmark bond yields reversed earlier falls, gaining 6 basis points to 8.40 percent at 3:04 p.m. in Istanbul after the auction, according to the RBS Istanbul Benchmark Bond Index.