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Turkey, it said on September 15.
Moody's Investors Service has downgraded its ratings on mortgage-covered bonds issued by Turkish private lenders Akbank, Garanti BBVA, Vakifbank and Yapi Kredi Bank along with SME-covered (small and medium sized enterprise-covered) bonds issued by Sekerbank by one notch to Ba3, three notches below investment grade, from Ba2, it said on September 16.
Moody’s Investors Service unit Moody's Public Sector Europe has downgraded the long-term issuer ratings of the Metropolitan Municipalities of Istanbul and Izmir one notch from B1 to B2, five notches below investment grade, it said on September 15.
Moody's Investors Service has downgraded its ratings on eight leading non-financial corporates domiciled in Turkey, namely largest conglomerate Koc Holding, its oil refiner Tupras, conglomerate Oyak and its steelmaker Erdemir, largest mobile operator Turkcell, glassmaker Sisecam, and Anadolu Group’s brewer Anadolu Efes and its Coca-Cola Icecek, to B2, five notches below investment grade, the rating agency said on September 17.
As the Turkish government's options narrow in the face of the depreciating Turkish lira, there is a risk it could introduce a moratorium on foreign currency payments across some or all asset classes to preserve FX or impose capital controls, Moody’s said on September 21 in answers to frequently asked questions on Turkey’s credit risks amid sustained lira pressure.
“Either of these outcomes would be highly damaging for domestic businesses and would likely constitute an event of default by the sovereign because they can impair sovereign debt service. Moreover, they would not solve the fundamental structural challenges the Turkish economy faces,” it added.
Sanctions imposed on Turkey by either the US or the EU over foreign policy clashes were “possible this autumn”, Moody’s also noted.
2.4 US ambassador hits out at ballooning debts owed to pharma companies by Turkish state hospitals
Debts owed by Turkish state hospitals to pharmaceutical companies in the US and elsewhere have risen to $2.3bn from $230mn a year ago and Turkey would ignore the debts at its peril, the American ambassador to Turkey said on September 23.
Companies would consider abandoning the Turkish market if Turkey failed to fully meet the debt payments to American pharmaceutical firms, the ambassador, David Satterfield, was reported by Reuters as saying in addressing a trade conference streamed online. Satterfield also criticised a new Turkish law that can be used to crack down on big social media sites.
Satterfield was quoted as saying during the conference hosted by the US-Turkey Business Council that US Commerce Secretary Wilbur Ross raised the debt issue with Turkish President Recep Tayyip Erdogan and Finance Minister Berat Albayrak a year ago and was assured that arrangements would be made for prompt payment.
A year later those companies were being asked to accept significant reductions in the amounts owed, Satterfield said, adding that there would be consequences for non-payment of debt or reductions in payment.
8 TURKEY Country Report October 2020 www.intellinews.com
