Home > General Topics > Economics > 15.75% return on turkey government notes?

15.75% return on turkey government notes?

  1. how can i buy turkish bonds. current interest rate is this crazy, would it be reflected into the bonds.

    why isn't everyone buying it then .

    thank you.
     
  2. well, what are you going to do it they decide to stop paying on them?
     
  3. Inflation/currency risk is high... perhaps default risk, too.
     
  4. Keep in mind that before the mad heat seeking carry trade money pushed rates of EM notes lower than some corporates these EMs notes were giving off 25%+

    If we see any kind of real global recession I wouldn't want my money in Turkish notes for any price.
     
  5. have they ever defaulted ?

    what about iceland? indias not bad either.
     
  6. Safest way to play these things is via an international or EM bond fund, unless you really know what you are doing there are too many risks involved that are cumbersome for a retail trader to hedge.

    An old article but covers the basics:

    http://www.businessweek.com/investor/content/nov2004/pi2004113_6948_pi025.htm

    Going back to Turkey, if an Islamic fundamentalist government came to power there they could simply cancel all government obligations and you would have no recourse. Unlikely I know but what with the currency and inflation risk 15% isn't much compensation for a country like Turkey as far as I am concerned. I not a bond guy but spreads are still too tight according to people I know who work in this area.
     
  7. Buy the leveraged carry trade. Long USDJPY, short USDTRY is synthetic long TRYJPY. I would be very careful and to trade it small.
     
  8. Saxo bank told me three months ago that they have or will introduce the TRY/JPY. I am also considering the Island Krona (ISK?) Does anyone know how to play the ISK vs. US or JPY.
    Yen is getting strong though which is another issue.

    I would love to buy the Turkish bond (with leverage). Europe domographics have no choice but to accept Turkey. If you know of any fund that buys high yielding bonds and short low yield let us know.
     
  9. What is fine Turkish long cut tobacco made out of?
    If they defaulted, would they tell you to put that in your pipe and smoke it?
     
  10. what is the probability of default?
     
  11. http://news.bbc.co.uk/2/hi/europe/7225889.stm

    'Deep state plot' grips Turkey

    It is a story that has set Turkey abuzz with rumour and speculation.

    At its heart is an ultra-nationalist gang known as Ergenekon, exposed when 33 of its alleged members were seized in a police raid in late January.

    The claims widely reported in the Turkish press ever since read like a thriller.

    They allege the gang was plotting to bring down the government.

    It is claimed their plan was to assassinate a string of Turkish intellectuals, including Nobel Laureate Orhan Pamuk, fomenting chaos and provoking a military intervention in 2009.

    A "menu" of targets had already been drawn up and a hitman hired when the police swooped, according to the daily Hurriyet.

    Sabah newspaper linked the gang to the recent murder of three Protestant Christians and Turkish-Armenian journalist Hrant Dink.

    Those details - apparently leaked by police - have never been officially confirmed.

    The lawyers of several of the accused told the BBC only that their clients have been charged under Article 313 of the penal code for inciting armed revolt against the government.

    Those still detained include retired Brig Gen Veli Kucuk, an alleged mafia boss and an ultra-nationalist lawyer who provoked numerous prosecutions against prominent Turkish writers and intellectuals - including Mr Pamuk - for "insulting Turkishness".

    ...
     
  12. Difficult to put a percentage on it specifically. That the interest rate is so high means the risk of either default or currency debasement is high.

    Turkey's financial history is rotten. In 2005, they revalued their currency by 1,000,000:1.
     
  13. I visited Turkey in oktober. My mother was looking for a holiday apartment somewhere warm. I never saw anything like it: in the Alanya region alone there were 100's of empty apartments and half finished buildings and very little buyers. Project developers were offering us to pay half now and half in 2 years time.
    To call it a buyers market was an understatement. She didn't buy anything there. She's going to visit the south of Spain later this month to have a look around there.
     
  14. The real estate market is one of the slowest moving markets. Tell her to offer 30% less than asking price if whe wants to be able to sell in a few years at a profit (if she gets a profit)...
     
  15. This thread and similar ones that I see recently show that money is flowing out of US.
     
  16. as long as feds keep cutting money will continue to flow into korean bonds (5%) and other high yield fixed incomes right ?
     
  17. what does it mean they revalued their currency ?

    so i guess from looks of it its better to do EM instead of buying these directly.

    what about iceland, india? do these place have high risk of default as well ?
     
  18. "Revalued Currency" = repudiated old currency, issued "new" currency. The new currency was like the old currency but with 6 zeros lopped off.
     
  19. Don't they issue bonds in their local currency, the New Lira?

    If so be aware of possible devaluation, this bonds are pretty illiquid, so you may not get out fast enough in case of a devaluation or default.
     
  20. links to related info:

    1994 Currency Crisis in Turkey:
    http://www.worldbank.org/html/dec/Publications/Workpapers/WPS1900series/wps1913/wps1913.pdf

    1997 Military Coup:
    http://en.wikipedia.org/wiki/1997_Turkish_coup_d'├ętat

    2001 Currency Crisis:
    http://news.bbc.co.uk/2/hi/business/1183668.stm
    http://www.econ.brown.edu/fac/Herschel_Grossman/courses/122readings/Ozatay&Sak.pdf

    ?future?:
    http://seekingalpha.com/article/27490-is-turkey-headed-for-financial-crisis-again

    ---

    you could also open a savings account at a Turkish bank, see HSBC turkey;

    http://www.hsbc.com.tr/eng/retail_banking/interest_rates_and_fees/interest_rates.asp#1
    rates on TRY get as high as 17%

    some Turkish banks have full featured online banking systems, where you can transfer your money internationally and domestically online, you can buy bonds and funds, and trade forex