Treasury Bond Auctions Draw Strong Demand as Total Sales Near ₺90 Billion

Turkey’s Treasury successfully completed two government bond auctions, generating substantial investor interest and bringing total sales close to ₺90 billion when combined with pre-auction transactions. The results underline continued demand for both inflation-linked and long-term fixed-rate debt instruments, even amid a complex interest rate environment and tight financial conditions.

In the two auctions, the Treasury recorded total direct sales of ₺36.1759 billion. When these figures are added to the ₺53.8 billion raised through non-competitive sales (ROT) ahead of the auctions, the overall issuance volume climbed to ₺89.7759 billion. The combined outcome highlights the Treasury’s ability to secure funding across different maturities while diversifying its borrowing profile.

Two Distinct Bond Offerings

The Treasury issued two separate instruments as part of the auctions. The first was a four-year (1,456-day) bond indexed to the Turkish Lira Overnight Reference Rate (TLREF), designed to provide protection against interest rate volatility. The second was a longer-term, ten-year (3,521-day) fixed-coupon bond, offering investors predictable returns over an extended horizon.

This dual-structure approach allowed the Treasury to appeal to a broad investor base, ranging from institutions seeking rate-linked products to those preferring long-term fixed income securities.

Strong Demand for TLREF-Indexed Bond

The TLREF-linked bond auction attracted particularly strong demand. Net sales in this auction reached ₺29.3928 billion, while the nominal sales amount totaled ₺29.589 billion. Investor appetite was reflected in the total bids submitted, which amounted to ₺79.609 billion, far exceeding the amount offered.

Interest rate outcomes in the auction were tightly clustered. The lowest compound interest rate was set at 18.60%, while the average came in at 18.77% and the highest reached 18.84%. This narrow range suggests a relatively stable market expectation regarding short- to medium-term interest rates.

Pricing also reflected healthy demand. The minimum price for the TLREF-linked bond was recorded at ₺99.051, with an average price of ₺99.337. These levels indicate that investors were willing to accept pricing close to par value, reinforcing confidence in the instrument.

The bond, which pays coupons every six months at a rate of 18.60%, will be issued with a value date of Wednesday, January 14, 2026. The redemption date has been set for January 9, 2030, aligning with the four-year maturity profile.

Fixed-Coupon Auction Shows Selective Interest

The second auction focused on a ten-year fixed-coupon bond, reissued with a semiannual coupon rate of 15.03%. Although demand was more measured compared to the TLREF-linked auction, the offering still attracted notable interest from investors seeking longer-term yields.

Total bids in the fixed-coupon auction amounted to ₺11.436 billion. Net sales were recorded at ₺6.7831 billion, while the nominal sales total stood at ₺5.696 billion. These figures indicate a cautious but steady appetite for long-duration government debt.

Interest rate results were higher, reflecting the longer maturity and fixed nature of the bond. The compound yield ranged from a low of 28.75% to a high of 29.32%, with an average compound interest rate of 29.09%. On a simple interest basis, the average yield was calculated at 27.24%.

Pricing levels were notably above par, signaling that investors were willing to pay a premium for the fixed coupon structure. The minimum price was set at ₺118.380, while the average price reached ₺119.086.

The bonds sold in this auction will also be issued on January 14, 2026. The final redemption date for the instrument is September 5, 2035, consistent with its ten-year maturity profile.

Financing Strategy and Market Signals

Together, the two auctions provide insight into the Treasury’s broader borrowing strategy. By combining a rate-indexed bond with a long-term fixed-coupon instrument, the Treasury balanced its exposure to interest rate risk while extending the maturity of its debt stock.

From a market perspective, the strong demand for the TLREF-linked bond highlights investor preference for instruments that adjust to prevailing interest rates. Meanwhile, continued participation in the ten-year fixed-coupon auction suggests that long-term confidence has not disappeared, even as higher yields are required to attract buyers.