Turkey’s debt market, once seen as a rollercoaster for risk-hungry investors, is steadily evolving into one of emerging markets’ most compelling plays. After a year marked by political hiccups and swift rebounds, confidence is growing that the momentum stretching across 2025 will carry right through into 2026.
So far, Ankara has floated about $27 billion in bonds this year — slightly below last year’s tally — but analysts say the brief slowdown was more political pause than financial fatigue. With markets rebounding after the turbulence of spring, Turkey’s yield-hungry appeal has only grown stronger.
“Investors are back for the yield and staying for the story,” said one regional debt strategist. “Turkey has become the market where spread, liquidity, and optimism meet.”
The broader emerging market backdrop has worked in Ankara’s favor. A softer U.S. dollar and fading allure of pricey American assets have pushed investors to look elsewhere for returns. Turkey — now boasting improving credit metrics and a reform-driven economic tone — fits that bill neatly.
By early September, Turkey had already met its $11 billion sovereign issuance target, then went a step further, pre-funding part of its 2026 needs with an 11-year, $2.25 billion dollar bond priced tighter than expected. That deal alone signaled how much appetite remains for Turkish paper.
A calmer political climate has helped, too. A recent court decision quashing attempts to oust the main opposition leader has cooled domestic tensions and buoyed investor mood. Total international hard-currency issuance now sits near $13 billion, spread across dollar and euro offerings.
The demand isn’t coming from one corner alone. Alongside traditional emerging market funds, crossover investors from the U.S. and Europe — once cautious — are steadily boosting allocations. Turkey’s eurobond market, liquid and diverse, has turned into their favorite entry point.
Adding to this surge are banks from the Gulf, which have become major players in the Turkish debt scene. Institutions like Emirates NBD, Qatar National Bank, and Saudi National Bank are ramping up exposure, drawn by growth and diversification opportunities. The result: stronger liquidity, more sukuk potential, and deeper confidence in Turkish assets.
Even those who entered at higher yields months ago are holding firm, betting on a continued wave of Gulf and Asian capital. “If Turkey nudges into BB+ territory,” said one banker, “it could unlock a flood of Asian liquidity.”
The financial sector remains at the forefront. Turkish banks have dominated recent issuance, particularly in subordinated bonds. Vakif Katilim Bank’s $500 million AT1 issue, oversubscribed more than three times, showed that demand isn’t just healthy — it’s heating up.
Corporate debt, however, remains the next frontier. Political uncertainty earlier this year kept many issuers sidelined, but bankers expect fresh names — especially in renewables and infrastructure — to surface in early 2026.
The outlook isn’t about fireworks, but about consistency. Analysts describe the coming year as one of “steady renewal,” with refinancing flows maintaining activity even as new entrants trickle in.
“Turkey doesn’t need a dramatic comeback,” one investor remarked. “It just needs to keep doing what it’s been doing — steadily, quietly, and profitably.”
