Three Turkish lira denominated Euromarket public issues made this year open a niche market for investors who want to play with Turkish treasury bills without exposing themselves to the risks commonly associated with this high-yield paper.
It is not easy to identify the buyers because the bonds are usually pre-placed before they are issued and once they are issued the liquidity is not high. But the buyers belong to the category of investors who either won't or cannot take direct Turkish risk: institutional investors who are obliged by law to deal with triple-A institutions, hedge funds and buyers who, in general, are willing to forego a percentage of yield to insulate themselves against the risk of credit, interest payment or convertibility risk. Unlike standard Turkish lira denominated bonds, the bonds are Euroclear or Cedel cleared.
"This works for everybody with the possible exception of the investors," says an American banker who doesn't want to be named. Because in order for this whole thing to be attractive, the investors have to be prepared to take a significantly lower yield on their Turkish lira assets. "Therefore," he reasons, "the investors have got to be foreigners.