Fitch warns Turkish companies over Fed monetary policy

The global rating agency Fitch Ratings warned Turkish companies they may be facing vulnerability in their credit profiles if the United States’ Fed tightens its fiscal policy faster than expected, Bloomberg reported.

Citing a report published on Tuesday, Bloomberg noted that the slide in the Turkish lira and increasing debt expenditures could place Turkish companies in trouble.

Fitch sent Turkey deeper into the junk category earlier this month, giving the country a rating of BB, down from BB+. The lira is the worst-performing currency after the Argentinian peso among 24 emerging markets. The Turkish lira weakened 2.9 percent against the dollar on Tuesday after the Turkey’s central bank left interest rates unchanged.

Fitch’s report on Tuesday stressed that should the Fed decide to tighten its monetary policy, Turkey’s weaknesses will be a decline in the lira, increasing debt expenditures and a slowdown in economic growth. 

Large companies are seeking to rearrange almost $24 billion of loans in Turkey where the nation's energy sector alone facing $51 billion of debt.