Bond salesmen in Turkey’s main banks are more confident about the prospects for Turkey’s economy than they have been for a long time. This feeds through into an enthusiasm for the Turkish domestic bond market.
Despite a backdrop of falling inflation and a primary surplus that looks sustainable, Turkey bonds are issued with yields of 25%, while inflation stands at 10%, making a 15% differential. This price is partly determined by the government’s need to keep the markets sweet so that they allow it to roll over most of its debt stock over the course of a year.