Moody’s: Most rated Turkish corporates can handle refinancing risks despite uncertainties

Moody’s: Most rated Turkish corporates can handle refinancing risks despite uncertainties


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, as domestic GDP growth slows, financial conditions tighten and the lira weakens, Moody’s Investors Service said in a report on Sept. 11.

“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,” it noted.

“In addition, the lira’s sharp depreciation has made foreign-currency debt loads heavier for Turkish companies as repaying dollar/euro-denominated debt has become much more expensive. Worst hit are leveraged companies with unhedged short-term foreign-currency debt but no foreign-currency revenues or revenues indexed to foreign currency,” it added.

Most vulnerable to a weakening economy and depreciating lira are investment holding company, Doğuş Holding and diversified consumer products group Yaşar Holding, according to the report.

Seven Turkish companies are rated one notch above the government’s Ba3 bond ratings on the back of their market leader positions, material offshore revenues or revenues linked to hard currency, active currency risk-management policies, strong balance sheets and healthy liquidity.

“However, their ratings are constrained by Turkey’s Ba2 foreign currency bond ceiling because they are substantially exposed to the domestic sovereign environment,” read the report, adding that these companies are Anadolu Efes, Coca-Cola İçecek, Koç Holding, OYAK, Turkcell, Tüpraş and Şişecam.