Full disclosure I have zero experience investing in non-US government bonds (or really bonds for that matter). However, I saw that the Turkish 10Y Government Bond is yielding 28.535% rn. What are some reasons NOT to invest in these?
TIA!
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Bump. Know nothing about this but sounds too good to be true at face value…what’s the secret
There is a big FX risk if it’s TRY denominated
Is there a way to hedge the FX risk out of these bonds? I'm not sure I believe that Turkey will have a sovereign default.
They won’t have a default but the point is 28% return in TRY is not that great when the official interest rate is 40%…
Have you not even bothered to google Turkish inflation? Seriously basic stuff and THE key part of understanding why their interest rates are so high...
Turkish interest rates jump to 40% as central bank gets tough on inflation
TradingEconomics
Edit: What troll is saying this is inaccurate? OP asked for a reason not to invest in Turkey. Mid double-digit is easily reason #1, they've gone from 5:1 USD to nearly 30:1 in 5 years. You're an idiot if you're net long anything denominated in Lira.
Their bond rating puts them in the junk bond category. This, plus how high the rate is in general means that the market believes that Turkish bonds are fairly high risk. Their inverted yield curve is also not a good sign for their economic prospects over the next few years. It’s a good return, but you’d have to able to stomach the risk.
Did chat gpt write this? We all know what the market is saying.
USD denominated Turkish bonds are yielding <8%. The 28% yield in TRY is not the relevant metric for a dollar based investor unless they also have a view on the Turkish currency.
F around and find out, Turkey edition.
The issuer
One word: Erdogan.
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