Bond Push Perseveres Amid Turkish Market Turmoil

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Turkey's sovereign wealth fund is pressing ahead with a planned sale of dollar‐denominated bonds on Wednesday after weighing a delay during a sharp stock‐market sell‐off triggered by a court decision affecting the main opposition party's leadership. The Turkiye Wealth Fund is poised to issue both five‐year and ten‐year notes, guided initially at yields of approximately 7.625 per cent and 8.375 per cent, respectively.

The decision to proceed rests on the fund's mandate and market positioning, as it had already engaged international banks to manage the issuance earlier in the week. The debt offering represents a critical test of investor confidence in the Turkish market amid the latest bout of political turbulence.

Stocks surged downwards as a result of a judicial order removing the Istanbul branch head of the main opposition Republican People's Party and appointing an interim management team. Borsa Istanbul's benchmark BIST 100 index shed nearly 5 per cent during the day before closing with a loss close to 4 per cent, while bank equities were hit hardest. In early Wednesday trading, equities remained under pressure, with the market down around 2 per cent.

TWF's strategy follows its aggressive financing campaign over the past 18 months. The fund has raised nearly US $5 billion since early 2024 through a mix of conventional Eurobonds, Islamic‐compliant sukuk, murabaha agreements, and a large syndicated loan-all without sovereign guarantees. That includes a US $500 million Eurobond in February 2024, a US $750 million sukuk in October 2024, a €1.1 billion syndicated loan in March 2025, and a US $600 million murabaha deal with Kuwait Finance House in August 2025.

TWF also held investor meetings early this month to discuss raising up to US $500 million-its first debt issuance of 2025. While details of maturity and size remained under consideration, murabaha financing has become a key component of its strategy.

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Market watchers point to the bond sale's timing as calculated. Despite elevated political risks and shaken confidence among foreign investors, TWF is leveraging strong demand demonstrated in prior issuances to deliver financing without government backing. Observers note that spreads on its bonds have consistently offered a premium over sovereign obligations-exemplified by its 8.25 per cent bonds maturing 2029 trading at a yield around 6.33 per cent, versus sovereign equivalents yielding approximately 5.85 per cent.

The fund's earlier February Eurobond attracted a striking level of global interest; it was priced at 8.375 per cent after a record amount of demand overcame the initial pricing of 9.125 per cent, with orders exceeding US $7 billion on a US $500 million offer.

As markets digest the implications of the court ruling and the broader political environment, the bond issuance offers a window into how domestic agencies like TWF are navigating funding needs amid investor caution. Political and economic observers will be watching not only investor reception to the sale but also signs of how monetary or regulatory policy might evolve in response to shifting sentiments.

Absence of sovereign guarantee, coupled with TWF's track record of tapping both Islamic and conventional finance routes, underscores the fund's growing role as a quasi-independent conduit for large-scale financing. Its diverse capital market instruments and sizeable foreign-currency fundraising reflect an effort to insulate crucial public enterprises and infrastructure programmes from market volatility and sovereign ratings pressure.

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