26.08.2026 11:00
Türkiye's five-year credit default swap (CDS), which shows the country's risk perception in international markets, fell to 217 basis points, reaching its lowest level in the last six months. The Central Bank's interest rate steps, the decline in borrowing costs, and new strategic moves taken on the international stage played a key role in this recovery.
Turkey's 5-year CDS premium, considered a key indicator of the country's borrowing costs and risk perception in international markets, fell to 217 basis points, its lowest level since February 18.
Despite the ongoing conflicting process between the United States and Iran in the Middle East and the volatile course in global bond markets, the decline in Turkey's domestic borrowing costs was directly reflected in the CDS data. While the Central Bank of the Republic of Turkey's continuation of one-week repo auctions with a 37 percent interest rate maintained the balance in the domestic market, significant steps were also taken in foreign policy. In particular, the tripartite Mecca Agreement signed with Saudi Arabia and Pakistan stood out among the key factors that strengthened Turkey's geostrategic position in the region and positively influenced foreign investors' risk perception.
GRADUAL DECLINE FROM MARCH PEAK
Examining the risk premium's trend over the last six months reveals a highly volatile chart. The CDS premium, which rapidly climbed amid the panic created by the Iran War that broke out in mid-March, tested its highest level of the period by exceeding the 300 basis point threshold in April 2026. The risk premium, which experienced a sharp decline to 225 levels towards the end of April with moderate winds in the markets, showed brief corrective rallies in the 240-250 range in May and June but did not remain at these levels. In the past July and August, however, Turkey's CDS premium caught a gradual downward trend, settling below the 220 level and entering a horizontal and safe band at the reference support line.
WHAT DOES THE CREDIT RISK PREMIUM (CDS) MEAN?
The Credit Risk Premium, or CDS, one of the most important indicators tracking the pulse of financial markets, functions as a barometer measuring the risk of a country or institution going bankrupt or defaulting on its debts. Investors closely follow this premium, which serves as a kind of insurance policy against the possibility of non-repayment of a debt they have purchased. A rise in the CDS premium indicates an increase in the borrower's risk level, while a fall signals confidence in the economic and political climate. This value, directly linked to countries' economic stability, political moves, and global market conditions, plays a guiding and extremely critical role in foreign investors' financial decision-making processes.