Half of Turkey’s companies are constituted by weak
companies in terms of debt payback capacity following the financial shock. Turkey’s
strength lies upon the public balances whereas its weakness lies upon the
companies’ debt as well as its fragility against the growth, exchange rates and
interest rates. If the political
instability continues this way in Turkey, the shrinking external financing will
see its credit note drop.
As long as the capital inflow coming to Turkey drops, the
current account deficit drops too. In a conjuncture where the capital inflow
has stopped, the current account deficit drops due to the less money coming in.
The exit continues in the portfolio accounts as well as in the short-term
capital. During the month of February, the total amount of stock, bond and
deposit that have exited amounts to 2 billion USD. During the December –
February period, this total was 7 billion USD. In the exit stage from the
monetary expansion in the United States, it is well known that the developing
countries will get into trouble for it is going to be a troublesome period for
them.
During this process, the most critical area is the
following: what will the debtors that have high debt load and low debt service
capacity do? In a conjuncture where external funding has decreased and capital
inflows have reversed, the corporate sector will become more sensitive. During
such a period, debt costs rise and revenues fall. In other words, the companies
of the developing countries accumulated debt very rapidly and they will face
difficulties in servicing their debt.
In a sensitivity analysis in which one incorporates some
small and large company samples, in case there is a rise of 25% in the costs
and 25% drop in the revenues, there is a net increase in the number of weak
companies and non-performing loans. If the EBIT of the companies in question is
less than twice the debt service, these loans enter into the risky category. According
to this analysis, half of Turkey’s companies are constituted of weak companies
which carry risky loans.
In the last 5 years, Turkey has become an obese by eating
everything that has been served to her. In the debt change following the 5
years after the global crisis, Turkey has reduced its public debt whereas the
households, companies and banking sector have seen a credit growth which stands
as the champion...
