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Fitch Ratings expects Türkiye’s debt capital market to keep growing, with outstanding debt instruments projected to reach $550 billion by 2027. The agency warned that market volatility and thinner external buffers could constrain activity and keep funding costs high.
The forecast comes from Fitch’s Türkiye Debt Capital Market Monitor for the third quarter of 2026. The agency said growth would be driven by large external financing needs, upcoming debt maturities, fiscal deficits and the government’s goal of diversifying its funding sources.
“Türkiye’s debt capital market is likely to remain on a growth path,” said Bashar Al Natoor, Fitch’s global head of Islamic finance, pointing to sovereign funding requirements, refinancing needs and diversification goals.
The market’s outstanding stock rose to more than $526 billion at the end of the third quarter, up 4% from a year earlier. Issuance moved the other way. Total debt capital market issuance fell to $115.3 billion in the first nine months of 2026, as bond issuance dropped 8% year on year.
Sukuk, Islamic bonds structured to comply with Sharia principles and typically backed by assets rather than paying interest, bucked the trend. Issuance rose 46% year on year over the period, lifting sukuk’s share of total issuance to 16% from 11% a year earlier. Outstanding sukuk exceeded $46 billion at the end of September.
“Sukuk issuance has outpaced bonds, increasing its DCM activity,” Al Natoor said. He added that foreign investor demand “is intact,” although high inflation, low external liquidity and reduced external buffers could weigh on market conditions.
Fitch rates more than $17 billion of Turkish sukuk. All of them are below investment grade, and nearly all carry a “BB-” rating. The agency revised issuer outlooks to stable from positive in April.
Excluding China, Türkiye was the third-largest emerging-market issuer of US dollar debt in the first nine months of the year. It was also one of three G20 countries active in the sukuk market. In US dollar environmental, social and governance debt, Türkiye ranked fifth among emerging markets, again excluding China, with a 12% share.
The yield gap between Türkiye’s 10-year dollar sovereign bonds and US Treasuries has narrowed from its March peak, and liquidity in rated sukuk has improved. Fitch noted, however, that both measures remain weaker than the pre-war levels of January.
Non-resident investors’ share of domestic sovereign debt edged down to 7.2% at the end of August.
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