Turkey

The financial woes of Dogus Holding AS are only getting worse even as the Turkish owner of the Salt Bae steakhouse chain goes on a selling spree to help restructure debt, Bloomberg News reported. The Istanbul-based investment-holding group, controlled by Turkish billionaire Ferit Sahenk, has been disposing mainly of hotels over the past year as part of a December agreement with lenders to renegotiate the terms on $2.5 billion of debt.

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“When it comes to money, we have serious problems,” businessman Mehmet Naci Topsakal confided to Turkey’s president Recep Tayyip Erdogan at a ceremony to mark the construction of a new Istanbul arts centre in February, the Financial Times reported. Visibly uncomfortable, he blamed the housing agency, the state body that oversees hundreds of projects nationwide, for “ruining us” and asked the Turkish leader for a fuller discussion at a later date.

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Turkey’s Cukurova Holding is considering whether to ask Ziraat Bank to restructure a dollar-denominated loan it took out from the state-owned lender five years ago, according to people familiar with the plans. Cukurova has so far only made interest payments on the $1.6 billion loan and will seek a meeting with the bank before a pre-scheduled payment in July, should it decide to ask for the debt to be reorganized, the people said, asking not to be identified because the deliberations are private, Bloomberg News reported. The 10-year loan had a three-year grace period.

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Debt Catches Up With Turkey

It’s payback time for Turkey’s economy after a decade of living beyond its means, and the reckoning couldn’t come at a worse time for President Recep Tayyip Erdogan as the country heads toward bellwether municipal elections. An era of record monetary stimulus around the world supercharged Turkish companies as capital came pouring in, more than doubling corporate credit in the past 10 years, Bloomberg News reported. Driven by Erdogan’s push for growth at all costs, the momentum rarely stalled as the Middle East’s biggest economy repeatedly boomed back to life after downturns.

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Turkey’s central bank kept its benchmark interest rate on hold on Wednesday, sticking to a promise to stand firm on inflation even as the economy suffers a sharp slowdown in growth, the Financial Times reported. In its final meeting before critical local elections at the end of March, the bank’s monetary policy committee (MPC) said that its one-week rate repo rate would remain at 24 per cent. Turkey has struggled with sky-high inflation following a meltdown in the lira, which wiped almost 30 per cent off the currency versus the dollar last year.

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Yildiz Holding AS, a debt laden Turkish food conglomerate, plans to sell its Jacob’s cracker unit and production facilities in the U.K. this year, according to two people with direct knowledge of the matter. The owner of McVitie’s digestives and Godiva chocolates may offload the entire business or a stake to an investor, the people said, asking not to be named because the talks are confidential, Bloomberg News reported. The company is working with Oppenheimer Holdings Inc. on the sale, the people said.

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Turkey’s biggest buyer of soured debt expects sales of non-performing loans to increase by 33 percent this year as banks free-up capital to cope with a surge in corporate-debt restructurings, Bloomberg News reported. Lenders will probably sell about 10 billion liras ($1.9 billion) of bad-loan portfolios this year, Hayat Varlik Yonetim AS Chief Executive Officer Hilmi Guvenal said in an interview. Banks may receive up to 500 million liras this year from the sale of NPLs to asset managers such as Hayat Varlik, he said. There are 19 distressed-loan buyers in Turkey.

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Turkey’s government is making cheap credit a key part of its campaign trail, pushing banks to take on greater risks in an economy that’s already teetering on the brink of recession, Bloomberg News reported. President Recep Tayyip Erdogan’s administration is urging state-owned lenders to extend cheap loans to industries spanning agriculture to soccer clubs and help consumers pay off their credit cards or get below-market interest rates on mortgages.

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The Turkish owner of Godiva chocolates and McVitie’s biscuits has stepped off the acquisition trail. After years of global expansion, Yildiz Holding AS is speeding up asset sales to focus on its core business and underpin Turkey’s largest loan restructuring deal, which it struck with lenders last year, Bloomberg News reported. The Istanbul-based food producer plans to seek partners in units including Godiva’s business in Japan and some other Asian markets, while exiting non-core assets such as its mining and brick business.

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Turkish banks have not been receiving compensation since August for non-performing loans made to companies covered by guarantees from the state Credit Guarantee Fund (KGF), five sources familiar with the matter said. The KGF is designed to stimulate the economy by guaranteeing loans to small- and medium-sized firms that could not otherwise obtain credit, Reuters reported. Such loans were widely used in 2017 to boost the economy, prompting the biggest credit growth in recent years.

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