This $16 Billion Turkish Wall of Debt Is at Risk From Lira Crash

(Bloomberg) -- Major Turkish companies, financial institutions and the government have at least $16 billion in bonds denominated in foreign currency that are due by the end of next year, data compiled by Bloomberg shows.

This $16 Billion Turkish Wall of Debt Is at Risk From Lira Crash

The amount due by the end of next year is mostly composed of debt issued by Turkish financial institutions, and includes conventional bonds and Islamic sukuk bonds valued at a minimum of $100 million at the time of issuance. Investors are watching closely to see whether Turkish banks and other companies will maintain access to the foreign funding they need to keep economic activity humming as the country’s currency plunges.

“So far, a currency crisis has not turned into a debt crisis,” Stuart Culverhouse and Hasnain Malik, analysts at Exotix Partners LLP, wrote in a report. The country’s low public debt, at 28 percent of gross domestic product, “might be some comfort, and the country has ammunition in the form of $98 billion in official reserves,” they wrote.

But given Turkey’s reliance on external finance, a currency crisis could turn into a debt crisis, they said, especially for those firms that are highly leveraged and particularly sensitive to foreign-exchange moves.

Coca-Cola Icecek AS is first up with a senior unsecured note of $500 million it will repay Oct. 1. The company refinanced the securities last September to extend the maturity to 2024 at cheaper rates than previously, and now has “more than sufficient hard-currency cash” to meet its obligations, CCI said in a statement Tuesday. Fitch Ratings affirmed the company at BBB- this week, but kept its outlook negative in line with that of the sovereign, while pointing out all of CCI’s operations are based in emerging markets.

Heavy Load

Next year has a heavy concentration of bonds maturing for Turkish issuers, Bloomberg data show. Lender Turkiye Garanti Bankasi AS has $1.4 billion in three bonds maturing between February and October. The Turkish government has a sukuk of $1.25 billion that’s due in October, plus three bonds denominated in U.S. dollars and euros, nominally valued at $4.4 billion in total, that will mature between March and November.

2018

Issuer Name

Amount Outstanding
(in $)

Maturity

Currency of bond

Coca-Cola Icecek AS500,000,00001/10/2018USD
Turkiye Is Bankasi AS750,000,00010/10/2018USD
Hazine Mustesarligi Varlik Kiralama AS1,250,000,00010/10/2018USD
Turkiye Vakiflar Bankasi TAO500,000,00031/10/2018USD
Yapi ve Kredi Bankasi AS500,000,00003/12/2018USD

2019

Issuer Name

Amount Outstanding
(in $)

Maturity

Currency of bond 

Turkiye Garanti Bankasi AS125,000,00011/02/2019USD
Turkey Government International Bond1,500,000,00011/03/2019USD
Turkey Government International Bond1,425,275,00002/04/2019EUR
Turkiye Is Bankasi AS500,000,00021/04/2019USD
TF Varlik Kiralama AS500,000,00024/04/2019USD
Export Credit Bank of Turkey750,000,00024/04/2019USD
QNB Finansbank AS/Turkey500,000,00030/04/2019USD
Turkiye Halk Bankasi AS500,000,00004/06/2019USD
Turkiye Vakiflar Bankasi TAO569,180,00017/06/2019EUR
Turk Telekomunikasyon AS500,000,00019/06/2019USD
KT Kira Sertifikalari Varlik Kiralama AS500,000,00026/06/2019USD
TF Varlik Kiralama AS195,479,20028/06/2019MYR
Albaraka Turk Katilim Bankasi AS350,000,00030/06/2019USD
TC Ziraat Bankasi AS750,000,00003/07/2019USD
Turkiye Garanti Bankasi AS569,085,00008/07/2019EUR
Alternatifbank AS250,000,00022/07/2019USD
Turkiye Garanti Bankasi AS750,000,00017/10/2019USD
Yapi ve Kredi Bankasi AS550,000,00022/10/2019USD
Turkiye Sinai Kalkinma Bankasi AS350,000,00030/10/2019USD
Turkey Government International Bond1,500,000,00007/11/2019USD

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