A FX stress analysis showed that Turkish corporates are the most exposed among EMEA emerging markets to a scenario of slowing growth, rising interest rates and a persistently weak local currency, Fitch said on Monday.
Foreign-currency - typically USD- debt can be an effective hedge against exchange-rate risks for companies with significant dollar receipts, but can also create risk when used by companies with mostly local-currency revenues, according to Fitch. This is the case for many Turkish corporates, which are lured by headline lower interest rates for dollar borrowing and by the depth of overseas capital markets, the rating agency stressed.
Fitch explained that in its stress case it modelled the impact of a 15% currency depreciation in 2014 and 2015, combined with a halving of issuer-specific corporate growth forecasts and a 250bps increase in average interest rates on local-currency debt, as well as higher rates on foreign-currency debt that needs refinancing. Under this scenario, aggregate leverage for Fitch-rated Turkish corporates rose by around 1.5x, while fixed-charge coverage ratios halved, Fitch said. These risks are largely already reflected in its ratings, as many of these companies are in the 'B' rating category, Fitch asserted.
Related Articles
Kurdish official estimates Iraqi oil losses at $28bn
The 18-month suspension of oil exports from Iraqi Kurdistan has cost the state more than $28bn in lost revenue, a senior Kurdish official has said, as the fiscal damage is compounded by security ... more
Turkey’s Şahinler invests $100mn in Egypt’s garments and tourism sectors
Turkish group Şahinler Holding is expanding its operations in Egypt with new investments exceeding $100mn across the ready-made garments and tourism sectors, Al Sharq Business reported on August 27, ... more
Turkish government plans special "People's Aisle" sections in markets for cheaper products
A new government-backed initiative called “Cumhur Reyonu” (“People’s Aisle”) will be rolled out across Turkey’s major supermarket chains, which collectively operate over 55,000 branches ... more
Most Read
-
Renewable capacity growth is faster than ever, but more acceleration needed to meet Paris 2030 goal, says IEA
1 year ago
-
Kyrgyzstan abandons attempt to rescue Russian climber trapped on icy summit of country’s highest mountain
23 days ago
-
BERTRAND: China after Communism, preparing for a post-CCP China
1 month ago
-
Hungarian economy faces weak growth, slow path to price stability, central bank report shows
2 months ago
-
UKRAINE REMONT: The battle to build: signs of recovery in Ukraine's construction industry
5 months ago