Moody's says Turkish companies have stable albeit cautious outlook

ANKARA (A.A) - January 11, 2012 - International ratings organization, Moody's, said on Wednesday that Turkish companies had a stable albeit cautious outlook. Moodys said however, a number of risk factors could potentially affect the companies' credit quality over the next 12-18 months. The outlook for non-financial Turkish companies was based on its expectations that they would benefit from moderate economic growth of 2.5-3.5 percent in Turkey in 2012 as a result of their strong domestic focus, a Moody's report on Turkish companies in 2011 and their outlook in 2012 said.  "However, our outlook for Turkish corporates is cautious as a result of various risk factors that could affect their credit quality going forward, such as those related to financial market volatility, refinancing and expansion," Martin Kohlhase, a senior analyst at Moody's Corporate Finance Group, said. Moody's said Turkey's trade and current account deficits had deteriorated due to higher domestic consumption and higher energy prices, as the country imported the vast majority of its energy requirements. As the current account deficit was financed by more volatile sources of capital, such as loans and foreign exchange deposits, Turkey was more prone to sudden shifts in investor sentiment, which could create volatility, Moody's said. The rating organization said in case Turkish lira continued to lose value, it would be harder for companies to pay back their debts, and noted that although this provided relief to exporters, it was a burden for corporates that had significant amounts of dollar-denominated debt as they faced higher refinancing costs.