Akbank sets record with AT1 bond

Istanbul-listed Akbank has set new standards with the placement of a subordinated Additional Tier 1 (AT1) bond. On February 13, the institution issued a $600 million bond with a coupon of 7.95 percent, falling below the eight percent mark for the first time.

AT1 bonds are perpetual, subordinated instruments that can be used to strengthen equity capital in the event of a crisis. Akbank's bond is callable after 5.5 years. Turkish banks typically exercise a call option after five years. For regulatory purposes, a term of ten years is specified.

The issue was accompanied by Citigroup, Emirates NBD, First Abu Dhabi Bank, HSBC, JPMorgan, and Merrill Lynch. Fitch rates Akbank BB-/Positive, Moody's Ba3/Stable.

Cheaper than ever before

With a coupon of 7.95 percent, the bond is considered the cheapest AT1 issue by a Turkish bank to date. In August, Yapi Kredi offered 8.25 percent, and in October, Vakifbank undercut this mark with 8.20 percent. Akbank is now setting a new record – and at the same time significantly improving its own terms: in March 2024, the institution had to pay 9.37 percent for a comparable security.

Table: Most important AT1 securities sold by Turkish banks.

The issue is taking place in an environment in which Turkey's credit default swaps (CDS) continue to trade above 200 basis points, while the yield on ten-year Turkish government bonds denominated in euros is below seven percent.

Revival of the covered bond market

At the same time, Akbank announced the sale of a five-year mortgage-backed covered bond with a volume equivalent to USD 100 million to the International Finance Corporation (IFC). This is the IFC's first investment in a Turkish covered bond since 2017. Back in June 2025, the European Bank for Reconstruction and Development (EBRD) contributed to the revival of this market segment with the purchase of a $100 million Akbank bond.

There is also momentum at the higher level. According to Fitch Ratings, the total volume of outstanding debt securities issued by Turkish issuers is expected to exceed $540 billion in 2026. At the end of 2025, it stood at $503 billion – an increase of 14 percent within a year. New issues climbed 12 percent to $140 billion.

In 2025, Turkey was the fourth-largest issuer of US dollar-denominated emerging market bonds, excluding China. At the same time, the sukuk market is gaining in importance: issues rose by 54 percent to USD 18 billion and now account for 13 percent of the total volume.

Despite this momentum, the market remains vulnerable to interest rate and currency fluctuations, geopolitical risks, and persistently high inflation. The share of foreign investors in domestic government bonds fell to 7.6 percent by the end of 2025.

This article was produced in cooperation with our partner bne intelliNews.