FX debt manageable for most Turkish firms: Moody's

By Fatih Erkan Dogan

ANKARA (AA) - Most of the Turkish companies rated by Moody’s are able to cope up with the recent slide in the value of lira thanks to their foreign exchange reserves and foreign currency inflows, Moody’s said Thursday.

“Debt loads for Turkish companies, which historically borrow in dollars and euros, have grown heavy on the back of the lira’s recent slide," according to a note from the rating agency.

“But the impact on most of the firms we rate is softened by their healthy non-lira cash reserves and foreign currency inflows from their overseas businesses," it added.

The U.S. dollar to Turkish lira rate saw a historic high of 3.9423 in early January, deepening fears of sharp rises in consumer prices and financial challenges for companies which sell goods in liras but import in foreign currencies.

The drop in Turkish lira also raises concerns about the funding of the country's current account deficit which Turkey fights to keep under control.

In a Tuesday report, Moody’s said that hard currency cash balances and long-term maturity profiles reduced the pressure on most rated Turkish non-financial companies.

Previously, on March 6, the institute reported that Turkish banks remained well-capitalized but the lira's depreciation and economic slowdown raised concerns over the banking system.