A Suggestion for a Bond Index

Gursel Kona

Istanbul Stock Exchange Review, 1997, vol. 1, issue 2, 23-40

Abstract: Since 1985, the debt securities markets in Turkey have become increasingly important with an acceleration in domestic borrowing required to finance continuously substantial budget deficits. Almost 80% of total stock of securities have comprised government debt securities, as of the end of 1995. Consequently, primary and secondary markets for government debt securities have made faster progress in comparison to the equity markets. In contrast, my six years of observations as a professional in the regulation side of the industry have shown me the most of the research and academic efforts have been diverted to the equity markets rather than the debt markets. In this study, a collection of bond indices have been suggested to measure the performance and summarise the changes in prices of bonds in secondary markets. Subsequently, theoretical background of Price and Performance Indices for four different maturity subgroups and one general Price Index (totally nine) have been introduced. Furthermore, some examples on various uses of these indices and associated comparisons, employing real data, have been supplied. These indices have been calculated and published by the ISE officially, since the beginning of 1996.

Date: 1997
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