Turkey Bonds

Turkey bonds offer a high yield among the sovereign emerging markets bond space. Inflation is at record high levels of above 80%. However, the central bank has resorted to rate cuts despite inflationary pressures due to political influence of Turkish President Recep Tayyip Erdogan. The Turkish Lira has fallen over 27% from January-September 2022 and Turkey has resorted to several measures to stem the Lira depreciation, including building its forex reserves. Turkey has also seen credit rating downgrades by Moody’s and Fitch in 2022. Turkey’s current credit ratings stand at B3/B+/B (Moody’s/S&P/Fitch). However, dollar and local bonds of Turkey for similar maturities have converged of late, with market participants trying to examine this conundrum. Given this backdrop, it has become important to track Turkey bonds.