Bloomberg:  Turkey Bond-Guarantee Plan Leaves Foreign Investors Underwhelmed

The Turkish central bank’s plan to attract hard-currency inflows is getting negative reviews from some international money managers.



The proposal would provide interest-free lira funding for investors to buy local bonds with a guaranteed 4% return in dollar terms, though discussions are ongoing and details could still change, Bloomberg News reported April 28.


That return isn’t high enough and the two-year lock-up period is a deterrent given the raging inflation facing Turkey, according to fixed-income portfolio managers.


Here’s what money managers and strategists are saying:


Paul McNamara, GAM UK:


“4% isn’t a remotely competitive rate for Turkish risk in U.S. dollars as you get 5.5% on a eurobond with a few months to run. So that makes it a lira play — with inflation on fire and the government apparently uninterested in reducing it, which is also unattractive. Looks to me as if the primary market would be Turkish money anyway.”



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Published By: Atilla Yeşilada

GlobalSource Partners’ Turkey Country Analyst Atilla Yesilada is the country’s leading political analyst and commentator. He is known throughout the finance and political science world for his thorough and outspoken coverage of Turkey’s political and financial developments. In addition to his extensive writing schedule, he is often called upon to provide his political expertise on major radio and television channels. Based in Istanbul, Atilla is co-founder of the information platform Istanbul Analytics and is one of GlobalSource’s local partners in Turkey. In addition to his consulting work and speaking engagements throughout the US, Europe and the Middle East, he writes regular columns for Turkey’s leading financial websites VATAN and and has contributed to the financial daily Referans and the liberal daily Radikal.