(Bloomberg) -- A flurry of international debt sales by Turkish banks helped jolt the country’s corporate eurobond market into life, as companies seize on investor demand after the government’s shift to more orthodox economic policies.

In the first corporate offering in nearly a year, household appliances maker Arcelik AS this week issued $400 million of bonds. Four major Turkish banks — Turkiye Vakiflar Bankasi TAO, Yapi ve Kredi Bankasi AS, Turkiye Is Bankasi AS and Turkiye Sinai Kalkinma Bankasi — also sold eurobonds this month.

More deals are in the pipeline. Private lenders Isbank and Akbank TAS, plus numerous firms such as Fiba Yenilenebilir Enerji, have recently got approval to sell hard currency debt abroad. Turkey’s corporate bonds have returned around 8% year-to-date, four times the average in emerging markets, according to data compiled by Bloomberg.

The sales come as a steep fall in the cost of insuring debt against default has brought back “delayed demand” from corporates and lenders who hadn’t been able to go on the market for a long time, according to Okan Akin, a credit analyst at AllianceBernstein. Surging interest from foreign investors also spurred the issuance, he said.

Turkey’s five-year credit-default swaps have nearly halved to hit a two-year low since President Recep Tayyip Erdogan won reelection in a May vote. That’s been mostly attributed to the reversal in economic policymaking since the appointment of two former Wall Street bankers — Mehmet Simsek and Hafize Gaye Erkan — as finance minister and central bank governor.

‘More Confident’

“Demand for these bonds has been healthy as investors feel more confident in increasing their exposure due to the expectations of a more orthodox policy mix and regulatory unwind after the new cabinet,” said Nish Popat, senior portfolio manager in the emerging market corporate debt team at Neuberger Berman. 

Arcelik’s sale was more than twice oversubscribed, allowing it to cut pricing by 25 basis points from its initial guidance to yield 8.5%. Vakifbank meanwhile lopped off 50 basis points to yield 9.125%. 

Simsek and Erkan are prioritizing price stability given inflation is running at nearly 60%, with the central bank launching a tightening cycle for the first time in over two years. 

The duo’s policies appear to be endorsed by Erdogan, who for years championed monetary stimulus to boost growth, policies that contributed to the exodus of international investors. Foreign holdings in lira bonds fell below $1 billion earlier this year, the lowest on record and down from above $30 billion six years ago.

New Sales Pitch

Simsek on Tuesday will hold an investor meeting co-organized by Goldman Sachs Group Inc. in New York, with the aim of charming foreign funds back to the country. Ahead of the meeting, Simsek told state-run Anadolu Agency that trust in the government was helping solve external financing problems. 

Over the last month, banks’ eurobond issuance has provided about $2.6 billion in financing, he said. 

“A broad-based geography from the UK to the Middle East, Europe, the US and Asia-Pacific expressed interest in the banks’ bonds,” he said in New York.

Read more: Turkey’s Simsek Seeks to Charm US Investors With Orthodox Steps

Foreigners also bought the government’s lira bonds in an auction on Monday, according to people familiar with the matter. Offshore investors purchased around 4 billion liras ($148 million) out of a total 9.4 billion liras sold by the Treasury, they said.

Read more: Lira Lifeline Became $124 Billion Problem That Haunts Turkey

Recent regulatory changes on FX-protected lira accounts are still leaving investors cautious on the financial sector’s debt for the time being, Popat said. 

But in a market starved of Turkish debt, issuers are still likely to find plenty of eager buyers, according to Popat.

“Going forward we expect more issuance from other corporates and expect these to be reasonably well covered,” he said. “Turkey assets remain substantially under-owned by foreign investors and expect this to be gradually closed over time as long as the country continues keeping an orthodox policy.”

--With assistance from Asli Kandemir.

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