Turkish Finance Minister Berat Albayrak said on Sunday he was resigning for health reasons, the second surprise departure of a top economic policymaker in two days after the central bank chief was ousted, Reuters reported. The upheaval follows a 30% slide in the lira to record lows this year amid the coronavirus pandemic as investors worried about falling forex reserves and the central bank’s ability to tackle double-digit inflation.
Turkey’s ruling party laid out details of a plan to restructure some debts and administrative fines in an effort to support companies under pressure from the coronavirus crisis, Bloomberg News reported. The plan includes tax debts, administrative fines and social security payments. The proposal amounts to about 500 billion liras ($63 billion) of restructuring, Mehmet Mus, the AK Party’s parliamentary whip, said on Friday, according to the Sabah newspaper. The proposed bill has been approved by the planning and budget commission of parliament.
Turkish banks suspended a plan to create an asset-management firm to take over their problematic debt in a bet that they’d be better off recovering some of the loans themselves rather than unloading them at a discount, Bloomberg News reported. Lenders are reluctant to sell non-performing loans for less than what they’re worth when they can restructure the borrowings and collect what is owed, people familiar with the matter said, asking not to be identified because the matter is sensitive. The plan can be revived if there’s another economic shock, the people said.
A Turkish energy producer and distributor started preliminary talks with lenders to renegotiate interest rates on $3.9 billion of debt to try and benefit from lower borrowing costs, Bloomberg News reported. Bereket Enerji approached nine lenders about adjusting rates on debt that had previously been restructured, people with knowledge of the matter said. Some banks are reluctant to meet the demand, while others are more sympathetic, the people said, asking not to be identified as the deliberations are confidential. Negotiations are continuing, they said.
Two Turkish construction groups in a consortium that includes General Electric Co. started talks to restructure 900 million euros ($1.1 billion) of loans, the latest sign of corporate distress following a plunge in the local currency, Bloomberg News reported. The firms, which used the debt to build hospitals, are negotiating with lenders on the foreign-currency loans, according to two people familiar with the matter, who asked not to be identified as negotiations are private. The consortium is made up of Gama Holding AS and Turkerler Insaat AS, while Boston-based GE’s stake is around 10%.
Bad debts could become more of a headache for Turkish banks when credit expansion slows, which threatens to reverse a decline in the ratio of souring loans, according to European Bank for Reconstruction and Development, Bloomberg News reported. “The NPL issue is an elephant-in-the-room,” Roger Kelly, EBRD’s Istanbul-based lead regional economist, said in an interview. A boom in credit extension increases the risk of taking on riskier customers, and means many of the loans are still relatively young, he said.
The owner of the Nusr-Et steakhouse, known by its founder chef’s meme Salt Bae, is negotiating with lenders to delay repayments on 2.3 billion euros ($2.7 billion) of debt that was restructured last year, Bloomberg News reported. Turkish billionaire Ferit Sahenk’s Dogus Holding AS is in preliminary talks with a group of banks after its cash flows took a knock because of the coronavirus pandemic, according to people familiar with the matter. They asked not to be identified as the talks are confidential.
The two companies building the stalled Etlik mega hospital in Ankara agreed to one of Turkey’s largest loan restructurings earlier this month, according to two sources, one of whom said the deal was was worth 1.1 billion euros ($1.3 billion), Reuters reported. The European Bank for Reconstruction and Development, which has invested some 650 million euros in big city hospitals in Turkey in recent years, confirmed it signed off on the deal that should allow construction of Etlik to resume.
Debt-laden Turkish companies are seeking more time to repay bank loans after the coronavirus pandemic upended plans to sell assets, according to four sources with direct knowledge of the matter, Reuters reported. Even before the virus hit Turkey in March, firms were seeking lower rates from banks after an aggressive monetary easing campaign and since then, large and small companies are looking for further revisions to nearly all of the restructurings agreed in the past two years, according to one of the sources.
Turkey had its debt rating cut deeper into junk by Moody’s Investors Service, which warned of a possible balance-of-payments crisis in assigning the lowest grade it’s ever given to the country, Bloomberg News reported. The sovereign credit rating was cut to B2, five levels below investment grade and on par with Egypt, Jamaica and Rwanda. The company kept a negative outlook on the rating, saying fiscal metrics could deteriorate faster than currently expected.