Moody’s keep Turkish firms on negative outlook citing lira volatility

Ratings agency Moody’s said the outlook for Turkish non-financial companies will remain negative for the next 12-18 months, Dünya newspaper reported.

Lira volatility was likely to remain high and tight financing conditions will persist, Moody’s said in a report, which also included outlooks for firms in the Middle East and South Africa. There was also limited clarity concerning government policies, it said, according to Dünya.

The profit margins of Turkish companies are under pressure after a currency crisis ripped through the economy this year, making imported raw materials less affordable and increasing the cost of foreign currency-denominated loans. Firms in the country are saddled with more than $200 billion of long-term, unhedged borrowing in foreign exchange, according to central bank data. The lira has lost almost a third of its value this year.

Moody’s said its outlook for South African non-financial companies would also remain negative, while it kept its stable outlook on firms based in the Gulf.