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5.4 External Debt
Turkey mired in ‘death of democracy’ outrage—but global lenders are unfazed. Turkish banks have retained the support of international lenders despite President Recep Tayyip Erdogan dealing a grievous blow to the state of democracy in Turkey by backing a re-run of the Istanbul election lost by his party. Although foreign bankers show their commitment to Turkish lenders, Turkey’s banks have been net debt payers since November 2014. The scenario was relayed by Global Capital on May 8 with an article entitled “Foreign lenders committed to Turkish banks despite Istanbul re-run”. The authoritarian president’s latest casting off of any democratic pretensions did not dent international lenders’ appetite for financing Turkey’s banks, market participants told the news outlet. The latest bout of depreciation hitting the Turkish lira (TRY) and growing pressure from fixed income investors for huge policy rate hikes, appear to have had a minimal impact on the taste of international lenders for Turkey’s debt as they continue to plough money into Turkish borrowers.
Destiny of the NPLs. On May 9, unnamed sources told Reuters that Turkish banks and international investors, including Goldman Sachs, Bain Capital, the European Bank for Reconstruction and Development (EBRD), the International Finance Corporation (IFC) of the World Bank Group and the International Bank
42 TURKEY Country Report June 2019 www.intellinews.com