Turkish Banks Return to Foreign Borrowing Markets – Fitch
- Fitch Ratings, an international credit rating agency, published a report on the bank sector in Türkiye.
- According to Fitch, after a short pause after March, the return of Turkish banks to international borrowing markets reveals that both the “investor appetite” and “market access” remain...
- The ability of banks to export in different capital structures, including AT1 borrowings, shows investor confidence and limited impact of recent market fluctuations.
Fitch Ratings, an international credit rating agency, published a report on the bank sector in Türkiye.
According to Fitch, after a short pause after March, the return of Turkish banks to international borrowing markets reveals that both the “investor appetite” and “market access” remain strong despite internal and external fluctuations.
The ability of banks to export in different capital structures, including AT1 borrowings, shows investor confidence and limited impact of recent market fluctuations.
“Following the fluctuations in March, the authorities reiterated their commitment to more Orthodox monetary policy and disinflation targets. This approach alleviated investor concerns and helped to control external pressures caused by foreign capital outlets,” he used.
Following the fluctuation, the Central Bank of the Republic of Türkiye (CBRT) increased its policy interest by 350 basis points, but in July it started to reduce interest rates again. Policy interest rates from 46 percent to 43 percent, while inflation fell to 33.5 percent as of July. Fitch predicts that the policy interest will drop to 35 percent by the end of 2025.
The investor’s appetite came back
The report also mentions the risks of financing that may occur. According to Fitch, banks have begun to export again, but if possible fluctuations in global funding conditions, or a change in Türkiye’s macroeconomic policy, weakens the confidence of the investor or deposit holder, the short -term foreign debts of banks and the high foreign exchange rate risk may increase.
The total amount exported by banks since the first half of 2024 has reached 8.8 billion dollars. This figure reflects the investor request and the proactive approach of banks to borrowing from the market.
After the 2023 elections, the expulsion of the banks, which gained momentum, watched strongly in the first half of 2024. The fall of the credit risk premium (CDS), the healing of pricing and the recovery of investor confidence supported this process. Although the fluctuation in March 2025 stopped acceleration, the banks began to re -exports in June.
Eurobond and secondary debt pricing are fixed or slightly increased compared to the last quarter of 2024. This shows that the effect of the fluctuation in March is limited and that the investor appetite has come back.