LONDON May 22 Turkish sovereign dollar- and
euro-denominated bonds will join a group of Barclays global
indices on June 1, following Moody's decision last week to award
the country its second investment grade credit rating.
Barclays will include 24 Turkish sovereign hard currency
bonds with a market value of $57.2 billion in its Global
Aggregate Index, a spokeswoman for the bank said on Wednesday.
Turkey will comprise 0.14 percent of the index.
Barclays does not disclose how much investor cash is
benchmarked to its indices.
In addition, Barclays will include 18 dollar issues worth
$44.5 billion into its U.S. Aggregate and U.S. Credit indices,
while six euro-denominated Turkish bonds with a value of 6.4
billion euros will enter the Euro Aggregate Index, Barclays
Turkey last week was elevated to investment grade by
Moody's, following on a similar decision late last year by
Fitch. That second rating potentially opens it up to investment
by more conservative funds that are only allowed to buy
investment grade-rated assets.
Analysts are divided over the actual impact on inflows,
noting that most investors have already piled into Turkey whose
local debt yields are at record lows and dollar bond yields are
now lower than Brazil.
"Markets tend to react way, way before the actual event
happens. When the actual event happens, it tends to be a
non-event or even a negative," said Alia Yousuf, head of
emerging markets at ACPI in London.
Others say more inflows are likely, especially given
Turkey's relatively high yields compared with the Western bonds
that dominate global indices.
"Potentially, the more indices you are included into, the
broader the set of investors who will be interested in buying
your bonds," said Alexander Perjessy, senior economist at asset
manager AllianceBernstein in New York.
The country's bonds are already included in JPMorgan's
dollar and local currency emerging debt indices, tracked by 80
percent of emerging market investors, but Perjessy said:
"(Global indices are) a different league to emerging market
indices, it's a much broader pool of money."
Turkish local debt is still not eligible for the key bond
index run by Citi, the World Government Bond Index (WGBI) which
is tracked by $2 trillion. That would require its local currency
debt to be rated a much higher A-\A3 by S&P and Moody's.
(Reporting by Sujata Rao and Carolyn Cohn; Editing by Toby