Turkish Markets Open 2026 with $3.5 Billion Bond Blitz as Investor Confidence Recovers

ISTANBUL – Turkey has kicked off the new year with a significant $3.5 billion dual-tranche Eurobond sale, signaling a robust return to international capital markets. This move comes as the country seeks to capitalize on a stabilizing domestic economy and a renewed appetite among global investors for emerging market debt.

Strategic Borrowing in a Crowded Market

The Turkish Treasury successfully priced $2 billion in notes due in 2033 at a yield of 6.35% and $1.5 billion in bonds due in 2038 at 6.9%. This issuance follows a landmark 2025, where Turkey established itself as a heavyweight in the Eurobond arena.

According to Ministry of Treasury and Finance data, the Turkish Treasury raised a total of $13 billion from international markets in 2025. When including corporate and banking sector issuances—such as the Turkey Wealth Fund’s record-breaking $1 billion sale in September—Turkish entities accounted for approximately 13% of the total $60 billion in subordinated Eurobond sales globally last year, second only to Saudi Arabia.

The “Imamoğlu Discount” Fades

Foreign participation in the Turkish bond market is witnessing a steady recovery after a turbulent 2025. Foreign holdings, which plummeted following the arrest of opposition figure Ekrem İmamoğlu in March, have now climbed back to 7.5%.

The return of capital is underpinned by improving macro-fundamentals:

• Falling Risk Premiums: Turkey’s five-year Credit Default Swap (CDS) dropped to 210 basis points in early January 2026, the lowest level since May 2018.

• Disinflation Trends: Official year-end inflation for 2025 closed at 31.1%, a sharp decline from the 75% peaks seen in mid-2024.

• Institutional Demand: The latest bond sale attracted an order book nearly three times its size, with significant allocations to top-tier asset managers in the UK and US.

Repayment Schedule: The 2026 “Debt Wall”

The Treasury faces a total external debt service of approximately $20 billion this year. The schedule is heavily front-loaded, which prompted the aggressive January issuance:

• Q1 Peak: Over $5.6 billion in external redemptions are due in January and February alone.

• Domestic Burden: The domestic debt service for 2026 is projected at 5.04 trillion TL, with January seeing a massive 613 billion TL redemption.

Debt Sustainability Indicators: Global Comparison

Turkey’s strategy relies on its relatively “clean” public balance sheet, which provides the fiscal space needed to roll over its higher external liabilities.