Turkey’s private sector long-term foreign debt up 1.1% m/m in August

Turkey’s private sector long-term foreign debt up 1.1% m/m in August
By bne IntelliNews October 13, 2017

Turkey’s private sector long-term foreign debt rose 1.11% m/m to stand at $216bn as of end-August from $213.7bn at end-July, the central bank said on October 13. At end-2016, the level of debt had risen by 4% y/y to $202.8bn.

Turkey is heavily dependent on external loans to finance its large current account deficit. Debt-financed consumption is regarded as one of the main drivers of the remarkable economic growth experienced by the country in much of the past decade. However, when it comes to the economic horizon, political concerns are placing sustained pressure on the outlook, creating a more challenging environment for the country’s private firms. Turkey’s corporate sector may experience difficulties in meeting liabilities. 

Non-financial private companies’ long-term debt stock rose by 2.01% m/m to $105.1bn at the end of August while private banks’ debt rose by 0.14% m/m to $92.9bn. Private banks’ loan debt declined by 0.53% m/m to $62.4bn in August while their debt comprised of bonds rose 1.54% m/m to $30.5bn.

Non-financial private firms’ long-term debt expanded by 8% y/y to stand at $97.2bn at the end of 2016 while private banks’ debt rose 1.2% y/y to $86.9bn. Private lenders’ loan debt contracted 2% y/y to $62.5bn at end-2016 and their bond debt rose by 9% y/y to $24.4bn.

Data from the central bank also showed that the private sector's short-term debt rose by 3.4% m/m to $17.5bn as of end-August. The short-term debt stock declined by 30% y/y to $14.3bn at end-2016.

Turkish banks' external debt increased in the first half of 2017 but the sector's foreign-currency (FC) liquidity remains sufficient to cover maturing short-term FC debt, Fitch Ratings said on September 21.

Turkey’s net external debt stock increased to $283.1bn at the end of Q2 from $267bn at the end of the first quarter. The country’s gross foreign debt stock was $432bn at the end of the second quarter versus $412bn at end-Q1.

The private sector's share in Turkey’s total gross external debt stood at $302bn at the end of Q2, rising from $288bn at end-Q2 while the public sector’s gross external debt increased to $129bn from $123bn at the end of Q1.

The public net debt stock stood at TRY236.8bn (€54.9bn) as of end-June, up from TRY232.6bn at end-Q1.