Bond yield hits record low, 5.43 pct April 25

Hülya Güler - Hürriyet

The compound rate for benchmark bonds saw 5.43 pct for the 1st time. REUTERS photo

The bond yield fell to a record, 5.43 percent low April 25, which is very low when compared to the 100 percents of the 1990s and 270 percent during the 2001 economic crisis. The historical low decline in the bond yield is mainly caused by the high liquidity by central banks to global markets as well as the high possibility of Turkey’s credit rating rising.

The compound rate for benchmark bonds saw 5.43 percent, a record low for the Turkish Republic. In global markets there are generally not sharp decreases in the yield as the Federal Reserve, European Central Bank and Bank of Japan announced assets to buy programs worth 1.5 trillion to 2 trillion dollars for one year or two years to guarantee growth in their countries. The Fed injects $85 billion to the markets monthly, and Japan injects $75 billion a month. When the ECB does it as required, one-fourth of Turkey’s national income is injected into the markets on average.

There are some peculiar reasons why the interest rate is decreasing in Turkey. The primary reason appears a possible increase in Turkey’s credit rating by Moody’s.