Turkey completed its annual overseas funding this week with a fresh dollar bond. Its use of different markets and discipline on size is a lesson to other emerging market sovereigns, particularly those with big borrowing needs.
Turkey has raised $10.8bn-equivalent this year in the Eurobond market, the great majority of its $11bn target.
It has done this with three dollar bonds, a dollar sukuk and a euro bond.
That is the same template as in 2024, but this year is noteworthy since the debt management office has had to navigate Turkish bond volatility due to the government's crackdown on political opposition.
This variety is to be applauded. Turkey — regarded as one of the most experienced and savviest emerging market sovereign issuers — has avoided relying too much on the conventional dollar market.
This year's activity is as diverse a mix of funding as is probably possible for the country in public markets. Its speculative grade ratings would rule it out of more niche issuance, such as Samurai or Swiss franc bonds, for example.
But it is not just using three markets that is noteworthy. Turkey printed five times, keeping its bonds fairly small.
It is not a sovereign that could print jumbo, multi-tranche deals like Romania and Poland, but the demand it attracts means it could issue more than the $2bn-$2.5bn tranches it has limited itself to this year.
This discipline on size means Turkey can achieve tighter pricing than if it went bigger. It also keeps investors thirsty, ensuring there is pent-up demand for its next issue.
Many EM sovereigns face rising borrowing needs in the next few years, whether due to bulging deficits or, in eastern Europe’s case, the prospect of higher defence spending.
Granted, sukuk may not be possible for most EM sovereigns, but they can print in a variety of currencies, particularly if they are investment grade.
And Turkey can be an example — of how to fulfil the government's borrowing needs, while keeping investors in all sorts of markets happy.