Türkiye: A Hotspot for Private Credit

Emerging Markets Are Embracing Private Credit—Türkiye Is No Exception

Over the past decade, private credit has taken off as a go-to financing tool for businesses, especially in emerging markets. With banks becoming more risk-averse and regulatory pressures mounting, companies are looking for alternatives—and private credit is stepping in to fill the gap. We’ve seen this trend take off in Latin America, Southeast Asia, and the Middle East, where private credit funds are providing much-needed capital to companies struggling to secure loans.

Türkiye is no different. With sky-high local interest rates, currency fluctuations, and banks pulling back on lending, private credit is becoming a real game-changer for both investors and businesses. These funds, typically lending at mid-teens USD rates, are flexible, fast-moving, and willing to finance deals that traditional banks simply won’t touch. That makes Türkiye a prime spot for private credit growth.

Why Turkish Businesses Are Turning to Private Credit

Türkiye’s financial scene has been shifting fast, making alternative lending more crucial than ever. Here’s why:

• Soaring Interest Rates & FX Volatility: Businesses in Türkiye are struggling with sky-high borrowing costs. The central bank’s aggressive rate hikes have pushed TL loan rates above 50%, making traditional financing nearly impossible for many firms. While USD loans might seem like a cheaper option at 6-8%, not every company can actually access them. Even when banks or EXIMBANK allocate limits, getting those funds disbursed is another challenge entirely. That’s where private credit steps in—offering a real alternative for companies, particularly those generating revenue in hard currency. Currency fluctuations can also make USD loans much more expensive in real terms. Private credit, typically structured in hard currency, is a great fit for export-driven companies that generate revenue in USD or EUR.

• Banks Are Staying Away from Special Situations: Turkish banks have become increasingly cautious, focusing mainly on low-risk corporate lending. This leaves companies undergoing restructuring, M&A, or aggressive growth with limited options. Private credit funds step in to support these businesses, providing financing where traditional lenders hesitate.

• Flexibility Over Traditional Bank Loans: Unlike banks, private credit lenders offer longer tenors, bullet repayments, up to two years of grace periods, and lighter covenants. This means businesses get financing that actually fits their needs rather than forcing them into rigid repayment structures.

• Cheaper Than Private Equity: Selling equity means giving up ownership and long-term value. Private credit lets businesses access capital while keeping control, which is a big deal for entrepreneurs and family-owned companies.

Why Private Credit Investors Should Be Looking at Türkiye

Türkiye may have some macroeconomic challenges, but it also offers big opportunities for private credit investors who know how to navigate the landscape. Here’s why it’s worth considering:

• High-Yield Potential: With Türkiye’s elevated risk premium, private credit investments here can generate much higher returns than in developed markets. Well-structured deals with strong collateral can turn this risk into serious upside.

• A Diverse, Entrepreneurial Economy: Türkiye isn’t a one-trick pony. It has strong industrial, manufacturing, and export sectors, all of which need financing. Private credit funds can find solid mid-market companies with real growth potential.

• Underserved Market = Big Opportunity: Unlike in the U.S. or Europe, where private credit has become ultra-competitive, Türkiye is still underdeveloped in this space. That means first movers can secure great deals with solid structures.

Why Borrowers Are Choosing Private Credit Over Other Options

For Turkish businesses, private credit is proving to be the go-to financing option over both bank loans and private equity.

• Better Than Bank Loans: Turkish banks have tightened their lending criteria, making financing slow and bureaucratic. Private credit funds move faster, structure deals creatively, and offer more flexible repayment terms.

• Better Than Private Equity: Private equity means giving up ownership, while private credit lets companies keep control. Plus, it’s often the cheaper option over the long term.

• Supports Pre-IPO Growth: Even though IPO markets have been picking up, not every company can go public overnight. Private credit is a smart way for companies to fuel growth before they’re ready for an IPO. Many mid-sized businesses in Türkiye need capital to scale, improve their financials, and build momentum before listing. Private credit gives companies the runway they need to strengthen their balance sheets, expand operations, and improve financial performance before going public—all without the dilution and long-term obligations that come with private equity.

Why Private Credit is Here to Stay in Türkiye

Private credit is here to stay in Türkiye. As businesses continue to struggle with tight bank lending and expensive equity financing, private credit funds are stepping in to fill the gap. For investors, Türkiye presents a rare mix of high returns, strong business fundamentals, and an untapped market.

For those looking at Türkiye, now is the time to take private credit seriously—whether as an investment opportunity or a powerful financing tool. As global financial conditions evolve, alternative lending solutions will play an even bigger role in emerging markets, and Türkiye is set to be one of the key players in this shift.