Macro and Politics

* The Treasury will hold a direct sale of a two-year TLREFK-indexed lease certificate today. After today’s sales, the Treasury will hold the direct sales of a 2y USD-denominated bond and a 2y USD-denominated lease certificate on November 20, finalizing its domestic borrowing program for November. According to the Treasury’s three-month domestic borrowing program covering the period of November 2025 – January 2026, it plans to borrow a total of TL128.3bn from domestic markets against its redemption of TL95bn this month, implying a rollover ratio of 135%. Having already raised a total of TL81.6bn from the market through three auctions last week, the Treasury is likely to secure an additional borrowing of around TL50bn via this week’s direct sales.

* The CBT will release the Residential Property Price Index (RPPI) for October @ 10:00 local time. The RPPI rose by 1.7% m/m and 32.2% y/y in September, reaching 195.7, while it posted a 0.8% y/y decline in real terms. Although the annual real contraction in house prices has persisted uninterruptedly since February 2024, the pace of the decline has markedly moderated, suggesting that real price dynamics are moving closer to neutral territory. Mortgage rates have eased from above 43% in June to below 39% in recent months, with the average mortgage rate standing at 38.8% as of September. Despite the limited downward adjustment in borrowing costs, we assess that the robust annual increase in mortgage-backed house sales has been supported by forward-looking price expectations, driven by the prolonged period of real price correction and the recent deceleration in real losses. We expect the annual real change in residential property prices to turn positive in the near term.

* The CBT will release September short-term external debt stock figures @ 10:00 local time. The short-term external debt stock in August materialized at USD169.8bn, down by 0.7% m/m.  In terms of short-term debt statistics, we believe that “debt stock on a remaining maturity basis,” calculated based on the external debt maturing within 1 year or less regarding the original maturity, is rather critical, which is at USD226.5bn as of August 2025. Of this total, USD25.6bn is attributed to loans taken by resident banks and private sector affiliates from their branches and affiliates abroad. Stripping this amount from the total results in USD200.9bn. We also add 12-month forward-looking CAD expectations on this amount so as to reach Turkey’s annual external financing need (EFN).  Accordingly, we calculate EFN as of August 2025 around USD225bn.

* The central government budget posted a TL223.2bn deficit in October, while the primary balance recorded a TL65.8bn deficit. This compares with a TL186.3bn budget deficit and a TL50bn primary deficit in the same month of last year. With the October data, the 12-month cumulative budget deficit widened from TL2.2tn to TL2.3tn, whereas the 12-month cumulative primary deficit rose from TL229.3bn to TL245bn. In Jan – Oct period, the budget deficit reached TL1.4tn, corresponding to 74.6% of our full-year 2025 deficit projection, while the primary balance posted a surplus of TL379.3bn during the same period. Budget revenues increased by 49.1% y/y in October and this implies a real improvement in revenues considering the 32.9% y/y CPI inflation during the same period. Cumulative revenues amounted to TL10.2tn in the first ten months of the year, achieving 79.3% of the Medium-Term Program (MTEP) revenue target. Central government expenditures, meanwhile, rose by 43.4% y/y to TL1.4tn in October. Over January–October, expenditures totaled TL11.6tn, corresponding to 78.7% of the TL14.7tn spending envelope projected for the 2025 central government budget. Our year-end 2025 budget deficit forecast stands at TL2.3tn (3.7% of GDP). Please recall that in the MTEP covering 2026–2028, the government revised its projections, raising the 2025 budget deficit-to-GDP ratio from 3.1% to 3.6%, and adjusting the 2026 estimate upward from 2.8% to 3.5%.