How Istanbul Became a Hub for Emerging Market Debt Trading

If you wanted to buy a Turkish Eurobond in 2015, you called London. The trading desks at JP Morgan, HSBC, Citi, and Deutsche Bank on Canary Wharf and in the City were the primary market makers for Turkish sovereign and corporate dollar-denominated debt. Istanbul-based banks participated, of course, but largely as local distributors feeding into the London-centred pricing and execution machinery. The foreign investor who wanted Turkish exposure, the domestic institution that needed dollar hedging, the corporate treasurer issuing in hard currency: all roads led to London. A decade later, the geography has shifted. Istanbul's bank trading desks, particularly those at Is Bankasi, Garanti BBVA, Akbank, and Yapi Kredi, have built fixed income operations that now compete directly with London for Eurobond flow. According to data compiled by the Banks Association of Turkey and cross-referenced with Euroclear settlement figures, Istanbul-based institutions intermediated approximately $42 billion in emerging market Eurobond trading volume in 2025, up from roughly $14 billion in 2020. The figure includes not only Turkish sovereign and corporate bonds but also a growing share of non-Turkish EM debt: Egyptian, Nigerian, Kazakh, and Gulf sovereign paper that is now being priced and traded from desks overlooking the Bosphorus rather than the Thames.

The origins of this shift are rooted in a structural irony. Turkey's high-yield, high-volatility fixed income environment, the same environment that has caused so much grief for domestic equity investors and consumer borrowers, turned out to be an ideal training ground for bond traders. When your domestic government bond market features yields above 30%, daily price swings of 50 basis points or more, and a constant need to manage currency risk, your trading infrastructure gets good fast. Turkish bank trading desks have spent the better part of two decades navigating one of the most volatile rate environments in any G20 economy. The technology they built, the risk management systems they developed, and the talent they trained were initially defensive measures, designed to manage the complexity of their own balance sheets. But those capabilities proved to be transferable. A desk that can price a 10-year Turkish government bond in a 45% rate environment, hedge the FX exposure in real time, and manage the settlement across three time zones is a desk that can also trade Egyptian T-bills, Nigerian Eurobonds, or Kazakh corporate debt. The skill set scales across emerging markets in a way that London desks, accustomed to the relative stability of developed market fixed income, sometimes struggle to match.

Geography has been an underappreciated advantage. Istanbul sits in a time zone that overlaps with both London's morning session and the Gulf's trading day, making it a natural bridge for fixed income flows between Europe, the Middle East, and Central Asia. When Abu Dhabi's sovereign wealth fund wants to execute a block trade in Turkish corporate bonds at 9 a.m. Gulf time, Istanbul's desks are already open; London's are not. When a Central Asian pension fund needs to rebalance its EM allocation, Istanbul offers linguistic and cultural proximity that London cannot. The post-Brexit shift in European financial services has also played a role, though a subtle one. Several London-based EM fixed income specialists have quietly relocated key personnel to Istanbul since 2021, attracted by lower operating costs, favourable personal tax treatment under Turkey's financial centre incentive programme, and the simple practical advantage of being closer to the markets they cover. The Istanbul Finance Centre (IFC) project in Atasehir, despite the justified scepticism it has attracted for its slow construction timeline and ambitious branding, has nonetheless created a regulatory framework that allows international financial firms to operate in Istanbul under rules designed to be competitive with the DIFC in Dubai and the AIFC in Astana. At least four specialist EM fixed income firms have established IFC-licensed operations since 2024, according to the IFC's published registry.

The role of Turkish banks as intermediaries for non-Turkish EM debt is the most interesting, and least expected, dimension of this story. Garanti BBVA's treasury division, leveraging its parent's Latin American network, has built a desk that trades Brazilian, Mexican, and Colombian sovereign bonds from Istanbul for European institutional clients. Is Bankasi, through its London subsidiary and its correspondent banking relationships across Africa, now provides liquidity in sub-Saharan African Eurobonds to a degree that would have been unimaginable five years ago. Akbank's fixed income team, widely regarded as one of the strongest in the Turkish banking sector, has expanded from its traditional focus on Turkish sovereign debt to cover a universe of over 200 EM corporate credits. The common thread is institutional ambition meeting market opportunity: Turkish banks, facing a saturated and volatile domestic lending market, have found in EM fixed income trading a revenue source that leverages their existing capabilities, diversifies their income, and positions them as credible players in the global capital markets ecosystem. The revenue figures, where disclosed, support the thesis. Garanti BBVA reported that its treasury and capital markets division generated 28% of the bank's total operating income in the first half of 2025, up from 19% in 2022. Is Bankasi's international banking subsidiary reported a 45% year-on-year increase in fixed income trading revenue for the same period.

The durability of Istanbul's position as an EM debt hub depends on factors that are partly within Turkey's control and partly not. The domestic rate environment, which created the conditions for Istanbul's trading capabilities to develop, will eventually normalise. When Turkish yields fall, as the TCMB's disinflation programme intends, the volatility premium that made Istanbul's desks so battle-tested will diminish. The question is whether the infrastructure, the talent, and the client relationships built during the high-rate era will persist when conditions change. The historical precedent offers some encouragement: London did not become the centre of Eurodollar trading because the UK had high interest rates; it became the centre because the infrastructure was built during a particular moment and proved sticky long after the original conditions changed. Istanbul has an opportunity to follow a similar trajectory, and the early evidence suggests it is doing so. The city will never rival London as a global financial centre in absolute terms. But in the specific niche of emerging market fixed income, where local knowledge, time zone advantage, and comfort with volatility matter as much as scale, Istanbul has built something real. The $42 billion in 2025 trading volume is not a one-off. It is the result of a decade of institutional investment, and the trajectory, for now, points upward.