Fund crisis spreads to Türkiye's corporate bond market
The crisis in Türkiye's investment funds is increasing risks in the corporate bond market, which is valued at more than TRY 1 trillion.
Total portfolio values have declined by approximately TRY 1.5 trillion following problems in the fund sector, while around TRY 35 billion in bonds issued by institutions linked to the crisis remain outstanding. Tera Investment Bank's failure to make a TRY 6.05 billion principal and coupon payment on October 5 has brought repayment risks in corporate bonds back into focus.
Türkiye's corporate bond market has expanded approximately 14-fold over the past decade, with investment funds holding around one-third of outstanding bonds in their portfolios. Accelerating fund outflows are forcing managers to sell assets to meet cash needs and reduce new bond purchases. Meanwhile, the value of assets with limited liquidity in funds undergoing liquidation has reached approximately TRY 334 billion. Experts warn that continued selling pressure could make financing more difficult for small and medium-sized companies and push borrowing costs higher.
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