Credit: REUTERS/MURAD SEZERANKARA, May 28 (Reuters) - Turkey's new retirement-fund guidelines will direct some 2.5 billion lira ($413 million) toward buying domestic government bonds, likely supporting hard-hit Turkish debt markets in coming months, bankers said on Tuesday.
Turkey's market regulator on Monday mandated that a minimum of 25% of money market fund portfolios would be directed towards investment in Turkish government bonds by the end of July. It also raised requirements for Turkish stock holdings in the retirement funds.
Turkey's two-year benchmark bond compound yield closed on Monday at 25.93% in spot trade, up from 25.74% at Friday's close and from around 18% before a renewed selloff hit the Turkish lira in late March. Last year a full-blown currency crisis tipped Turkey's economy into recession.
"Around 2.5 billion lira worth of short term retirement funds will need to be transferred to domestic government bonds from repo until the end of July," a bond trader at a bank told Reuters.
"We might see some new short-term issues by the Treasury...or the funds will have to buy from the secondary bond market."
Two other bankers provided roughly the same estimate, though they requested anonymity. According to their calculations, some 25% of the roughly 10.5-billion lira in liquid money market funds would need to be transferred to Turkish government bonds as of the end of July.
The first banker said the overall effect of the change would likely emerge gradually.
($1 = 6.0590 liras)
(Reporting by Nevzat Devranoglu; Writing by Ezgi Erkoyun; Editing by Jonathan Spicer)
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