Turkish debt capital markets buoyed by improved investor confidence

ANKARA

Fitch Ratings said Wednesday that Turkish debt capital market (DCM) was buoyed by improved investor confidence with a shift toward more conventional macroeconomic policies.

Turkish DCM will continue to be driven primarily by sovereign financing, funding diversification goals, and the Islamic finance development agenda over the next two years, it said in a report.

"The recent revival in foreign-currency debt issuances is a sign of lower near-term refinancing risks due to improved investor sentiment since Türkiye’s adoption of more conventional macroeconomic policies," said Bashar Al Natoor, Global Head of Islamic Finance at Fitch Ratings.

The rating agency expects banks and corporates to maintain a smaller DCM share than sovereigns, with issuance mostly opportunistic given the still-high costs.

In the medium term, DCM is projected to surpass $450 billion outstanding, with sukuk to exceed 20% of the issuance mix, it added.

"With over $225 billion external debt maturing in the next 12 months as of December 2023, Türkiye has always been vulnerable to shifts in investor sentiments, although the sovereign and private sector have proved resilient in their ability to access external financing," Al Natoor noted.