Moody’s says most rated Turkish firms can handle refinancing risks

Ratings agencies Moody’s said most Turkish companies it covered could handle refinancing risks posed by rising financial and economic uncertainties in the country.

“Healthy liquidity profiles and well-staggered debt maturities should shield most rated Turkish non-financial companies’ credit quality from potential refinancing risks over the next 12-18 months,” Moody’s said in a report.

The two most vulnerable rated companies were Doğuş Holding, which has already applied to banks to restructure its foreign currency debt, and Yaşar Holding, Moody’s said.

Turkish companies are saddled with more than $220 billion in unhedged, long-term foreign currency loans, according to central bank figures. The debt, which is becoming more problematic to service during a slump in the lira’s value, has raised concern for an economic crisis In the country.

“The greatest risk to Turkish companies' credit quality is the potential reduction in corporate access to borrowing if external funding availability tightens for the broader Turkey banking system and economy, though this is currently not Moody's base case scenario,” the ratings agency said.

Moody’s focuses its research on the largest Turkish firms. Earlier this year, the government implemented measures to restrict companies' foreign currency borrowing unless their revenues were largely made up of sales of exported goods.

Turkey’s lira has lost about 40 percent against the dollar this year. The currency’s losses have eased over the past few weeks amid a lull in a political crisis with the United States and a correction in the country’s current account deficit, which had widened to 6.5 percent of GDP due to a surge in imports that are now more expensive to buy.