{"id":659797,"date":"2013-05-23T10:14:05","date_gmt":"2013-05-23T14:14:05","guid":{"rendered":"http:\/\/blogs.reuters.com\/globalinvesting\/?p=9645"},"modified":"2013-05-23T10:14:05","modified_gmt":"2013-05-23T14:14:05","slug":"turkeys-investment-gradebond-market","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/659797","title":{"rendered":"Turkey\u2019s (investment grade)bond market"},"content":{"rendered":"

We wrote here<\/a> yesterday on how\u00a0Turkish hard currency bonds have been given the nod to join some Barclays global indices as a result of the country’s elevation to investment grade.\u00a0Turkish dollar bonds\u00a0will also\u00a0move to the Investment grade sub-index of JPMorgan’s flagship EMBI Global on June 28.<\/p>\n

Local lira debt meanwhile will enter JPM’s GBI-EM Global Diversified IG 15 percent Cap Index — \u00a0the\u00a0top-tier\u00a0of the bank’s GBI-EM index. But the big prize, an invitation into Citi’s mega World Government Bond Index, is still some way off. Requiring a still higher credit rating, WGBI membership is an honour that has\u00a0been accorded to only four emerging markets so far.<\/p>\n

Still, the Turkish Treasury is not complaining.\u00a0 Even before last week’s\u00a0upgrade to investment grade by Moody’s, it was borrowing from the lira bond market at record cheap levels of\u00a0around 5 percent for two-year cash. Ten-year yields are down half a percentage point this year. One reason of course is the gush of liquidity from Western central banks.\u00a0But most funds (at\u00a0least those\u00a0who\u00a0were allowed to\u00a0do so) had\u00a0not waited for the Moody’s signal before buying Turkish bonds.\u00a0So the bond market was already trading Turkey as investment grade.<\/p>\n

\"\"<\/p>\n

RBS analysts reckon that by end-April, Turkey had raised 40 percent of\u00a0this year’s\u00a0152 billion-lira borrowing plan, while the average bid-cover ratio at bond auctions this year has been 3.2, compared to\u00a02.5 in 2012. They write:<\/p>\n

\n

We anticipate demand to strengthen further following the recent rating upgrade by Moody’s to the investment grade level, providing Turkey with a whole new investor base.<\/em><\/p>\n<\/blockquote>\n

Whether the influx of foreigners is such a good thing can be debated — non-residents now own almost a quarter of the Istanbul bond market,\u00a0from less than 10 percent in 2009, RBS notes. That leaves Turkey more reliant on foreign money of the speculative, yield-seeking variety. The\u00a0positive is that lower\u00a0yields\u00a0make the treasury bond\u00a0market\u00a0less attractive to\u00a0local banks,\u00a0which hopefully\u00a0pushes them\u00a0into\u00a0the business of lending to the private sector– the place they really\u00a0should be.\u00a0\u00a0Turkish banks now\u00a0own 49 percent of the government bond market,\u00a0\u00a0a sharp fall from 57 percent just a year\u00a0back, RBS says:<\/p>\n

\n

We anticipate (Turkish t-bill) holdings to decline further, as banks allocate funds away from relatively low yielding government bonds and instead lend to the real economy at higher rates. <\/em><\/p>\n<\/blockquote>\n

So investment grade may bring in hot money but if it drives yields down further, that will be good news for the economy — if more foreigners move to higher-yielding longer-tenor bonds, and second,\u00a0if it\u00a0weans Turkish banks off their T-bill habit.<\/p>\n","protected":false},"excerpt":{"rendered":"

We wrote here yesterday on how\u00a0Turkish hard currency bonds have been given the nod to join some Barclays global indices as a result of the country’s elevation to investment grade.\u00a0Turkish dollar bonds\u00a0will also\u00a0move to the Investment grade sub-index of JPMorgan’s flagship EMBI Global on June 28. Local lira debt meanwhile will enter JPM’s GBI-EM Global […]<\/p>\n","protected":false},"author":7384,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-659797","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/659797","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/7384"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=659797"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/659797\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=659797"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=659797"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=659797"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}