Turkish firms exposed to foreign exchange risks: Fitch

ANKARA 

Companies in Turkey are the most vulnerable among EMEA countries to foreign exchange volatility, Fitch Ratings said, in a statement on Friday.

“Over 85 percent of Turkish corporate debt is denominated in dollars, while the majority of revenues are in Turkish lira." This large foreign-exchange exposure could lead to losses as the local currency weakens. Fitch said.

This means that  many Turkish companies must pay their debts in dollars, and, to do that, they must tap Turkish lira revenue. As the dollars now cost many more Turkish liras than before, companies may take losses or simply not be able to pay. 

The report noted that most of the debt is paid at the end of term, and this will further scale up risks as companies try to raise large amounts of foreign currency while access to foreign currency markets may be limited.

Fitch added that, among EMEA corporates, Kazakh issuers are the next-most exposed, while Russian, Ukrainian and South African companies are mostly better protected.