Turkey’s Debt Market Poised to Extend Strong Momentum Into 2026
Participants in Turkey’s debt market remain upbeat that the solid momentum seen in 2025 will carry through into next year, supported by continued issuance and refinancing activity—provided political risks stay contained.
Turkey has issued about $27 billion in bonds so far this year, slightly below the $32–33 billion raised in 2024. The decline stemmed largely from political disruptions in March and April, which temporarily halted issuance. Activity has since picked up again, in line with an improving business environment.
“Turkey is seeing a continuation of the busy cycle we saw in 2024. Despite the disruption earlier in the year, investor confidence remains high. Turkey is a play on picking up yield and spread in a world where rates are headed one way,” said Khalid Darwish, Managing Director and Head of CEEMEA Debt Capital Markets at HSBC.
Improved sentiment toward emerging markets (EMs) has also benefited Turkey, driven by a weaker US dollar and increased demand for value outside expensive US assets. Seen as a high-yield EM credit with attractive returns and a strengthening macroeconomic story, Turkey has drawn strong investor interest.
“We’ve seen robust fund flows into EM portfolios, creating a favourable backdrop. Turkey stands out as one of the few markets with an upward ratings trajectory,” said Alexander Wheal, Director of Debt Capital Markets at HSBC.
Having already met its 2025 sovereign issuance target of $11 billion by early September, Turkey capitalised on supportive market conditions last week with a $2.25 billion 11-year US dollar bond, tightening pricing to 6.80% from initial guidance of 7.15%.
“Turkey took advantage of favourable market conditions to partially prefund its 2026 financing needs,” said Fady Gendy, fixed-income portfolio manager at Arqaam Capital in Dubai.
Investor sentiment has also improved following a recent court ruling in Ankara dismissing a case that sought to unseat the opposition party’s leader and annul its 2023 congress, easing political tensions.
The latest sovereign issuance brings Turkey’s total hard-currency international issuance to roughly $13 billion year-to-date, including both conventional and sukuk bonds in US dollars and euros.
According to Gendy, strong demand for Turkish debt has come not only from local investors and emerging market funds, but also from “crossover” investors in the US and Europe who are gradually increasing exposure to EM assets. “Turkey’s liquid eurobond market and diverse issuer base make it an accessible entry point,” he said.
GCC Banks Deepen Presence
Gulf banks are also strengthening their role in Turkey’s debt market through bond purchases and lending. Institutions such as Emirates NBD, Qatar National Bank, Saudi National Bank, and Kuwait Finance House are leveraging their Turkish operations to expand exposure.
“For GCC banks, it’s a twin diversification play: Egypt and Turkey offer strong demand for banking products and long-term growth potential,” said Darwish.
This trend could pave the way for more sukuk and conventional bond issuances, further boosting liquidity and investor confidence.
“Even investors who bought credits at 9–10% yields and now see them valued at 7–8% remain active buyers, as they expect continued liquidity inflows from the GCC,” added HSBC’s Wheal. “This expanding liquidity base reassures international investors and sustains engagement despite tighter valuations.”
Additional momentum may also come from Asia. “Many Turkish issuers are exploring ways to tap Asian liquidity, which could be the next step for the market. A sovereign rating upgrade to BB+ or higher could unlock significantly more funding from Asia,” Wheal said.
Banks Lead Issuance
Outside the sovereign space, Turkish banks have dominated issuance activity this year, particularly in Additional Tier 1 (AT1) and Tier 2 instruments. Vakif Katilim Bank’s $500 million AT1 deal in October drew $1.6 billion in orders and priced at 8.375%, tightening from initial guidance of 8.875–9%.
“Most bank deals this year have priced at fair value with limited new-issue premiums,” said Gendy, whose firm participated in the transaction. He expects bank issuance to remain strong over the next year.
“Subordinated bonds are offering yields around 150–170 basis points above Turkish sovereigns, providing attractive premiums without significantly higher credit risk,” Gendy noted.
Outlook for 2026
Corporate issuance remains limited but is expected to gain momentum in early 2026. Outside the financial sector, activity has been concentrated in renewables and cement, as political uncertainty earlier this year delayed many corporate funding plans.
“Inaugural corporate deals are likely to increase next year, with strong interest from both issuers and investors,” said Wheal.
According to HSBC’s Darwish, refinancing needs will keep issuance levels steady rather than cause a sharp surge. “We don’t anticipate a V-shaped rebound but rather a gradual, sustainable growth path,” he said.
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