Turkey’s Eurobond Sales See Record Demand Despite Rising Political Tensions

Summary:
Turkey’s latest international bond issuances have drawn exceptionally strong investor demand, highlighting confidence in the country’s external borrowing capacity despite domestic political unrest. The Treasury’s $2 billion 10-year eurobond offering attracted three times the available supply, while the Turkey Wealth Fund’s $1 billion issuance last week received nearly $10 billion in bids. Analysts note that robust reserves and improved fiscal metrics are insulating Turkey’s eurobond market from short-term political volatility.

Turkey’s $2 billion eurobond offering oversubscribed 3x

The Treasury and Finance Ministry successfully issued $2 billion of 10-year dollar-denominated eurobonds on Tuesday at a 7% yield.

• Nearly 200 global investors participated in the sale.

• Demand came primarily from the UK, US, and European institutions.

• Total bids exceeded three times the offered amount.

The issuance came just days after the Turkey Wealth Fund’s successful $1 billion eurobond sale, which drew $10 billion in total orders, underscoring persistent foreign appetite for Turkish sovereign debt.

Investor confidence holds despite political unrest

The strong demand comes against the backdrop of heightened domestic political tensions, including a judicial crackdown on the Republican People’s Party (CHP) and protests in Istanbul after a government-appointed trustee attempted to seize control of a local party office.

Despite the unrest, investors appear largely unfazed.
Onur İlgen, Head of Treasury at MUFG Bank Istanbul, stated:

“Domestic political developments appear to have had less impact on external borrowing so far.”

State banks intervene to stabilize the lira

The eurobond sales coincided with heavy state-backed currency support. Last week, state-owned banks reportedly sold around $5 billion in the spot market to stabilize the Turkish lira after opposition officials were removed from Istanbul posts and replaced with government trustees.

According to Kaan Nazlı, Senior Economist at Neuberger Berman Europe, Turkish eurobonds are “less vulnerable to domestic political developments than other local assets.”

Emerging market bond issuance surges in 2025

Global demand for emerging market dollar-denominated debt has strengthened sharply this year.

Bloomberg data shows:

• Total emerging market bond sales rose 17% year-to-date, reaching $409 billion — the highest level since 2021.

• Turkey ranks third among the largest sovereign borrowers in 2025, after Saudi Arabia and Mexico.

Turkish eurobond yields near one-year low

According to a Bloomberg index, the average yield on Turkish sovereign eurobonds stood at 6.29% on Tuesday, close to its lowest level in the past 12 months.

This indicates that investors continue to price Turkey’s external borrowing risk more favorably, supported by improved fiscal indicators and growing foreign reserves.