Turkish companies said to seek debt restructuring as virus hits

The Turkish economy has shrunk by nearly 10 percent in the second quarter of this year due to the COVID-19 lockdown. (Reuters)
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Updated 16 September 2020

Turkish companies said to seek debt restructuring as virus hits

  • Pandemic lockdown has piled on troubles for businesses already struggling after the 2018 currency crisis

ISTANBUL: 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.

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 source.

Conglomerate Dogus was among the companies preparing for talks, according to the source, who requested anonymity.

In response to a query from Reuters, Dogus said: “Our regular and usual negotiations with banks are, as always, underway within the framework of good relations.”

Other restructuring talks involving major companies are already happening, the source said.

Businesses in Turkey, as in other parts of the world, have been hit hard by lockdowns aiming to stop the spread of the virus, with the economy shrinking nearly 10 percent in the second quarter.

But Turkish companies were already weakened by a 2018 currency crisis and some, including Dogus, Yildiz and several energy firms,  signed billions of dollars worth of restructuring deals.

Asset sales were a key part of some of those restructuring agreements but the impact of the coronavirus crisis has deterred some would-be buyers, the sources said.

Turkish conglomerate and food giant Yildiz last month announced a revision in which it paid off $600 million for its syndication credit and extended the maturity to 2030.

The company declined to comment for this story.

In February, Reuters reported some conglomerates, including Dogus and Yildiz, were in talks for cheaper loans after the central bank cut rates from 24 percent in mid-2019. The policy rate is now 8.25 percent but hikes could be in store given high inflation and a record low lira. 

While M&A activity has largely stalled this year, some deals were struck including Zynga’s purchase of Turkish mobile-game maker Peak for $1.8 billion in June. 


Demand issues ‘to overshadow OPEC+ supply next year’

Updated 29 October 2020

Demand issues ‘to overshadow OPEC+ supply next year’

  • Libya's rising production adding to pressure on oil markets

DUBAI: The Organization of the Petroleum Exporting Countries (OPEC) and its allies will have to contend with a “lot of demand issues” before raising supply in January 2021, given throughput cuts by oil refiners, the head of Saudi Aramco’s trading arm said.
OPEC and its allies plan to raise production by 2 million barrels per day (bpd) from January after record output cuts this year as the coronavirus pandemic hammered demand, taking overall reductions to about 5.7 million bpd. 

“We see stress in refining margins and see a lot of refineries either cutting their refining capacity to 50-60% or a lot of refineries closing,” Ibrahim Al-Buainain said an interview with Gulf Intelligence released on Wednesday.

“I don’t think the (refining) business is sustainable at these rates (refining margins).”

However, Chinese oil demand is likely to remain solid through the fourth quarter and into 2021 as its economy grows while the rest of the world is in negative territory, he added.

Among the uncertainties facing the oil market are rising Libyan output on the supply side and a second wave of global COVID-19 infections, especially in Europe, on the demand side, Al-Buainain said.

Complicating efforts by other OPEC members and allies to curb output, Libyan production is expected to rebound to 1 million bpd in the coming weeks.

Oil prices, meanwhile, fell over 4 percent on Wednesday as surging coronavirus infections in the US and Europe are leading to renewed lockdowns, fanning fears that the unsteady economic recovery will deteriorate.

“Crude oil is under pressure from the increase in COVID-19 cases, especially in Europe,” said Robert Yawger, director of energy futures at Mizuho in New York.

Brent futures fell $1.91, or 4.6 percent, to $39.29 a barrel, while US West Texas Intermediate crude fell $2.05, or 5.2 percent, to $37.52.

Earlier in the day Brent traded to its lowest since Oct. 2 and WTI its lowest since Oct. 5.

Futures pared losses somewhat after the US Energy Information Administration (EIA) said a bigger-than-expected 4.3 million barrels of crude oil was put into storage last week, but slightly less than industry data late Tuesday which showed a 4.6 million-barrel build.

However, crude production surged to its highest since July at 11.1 million barrels per day in a record weekly build of 1.2 million bpd, the data showed.

Gasoline demand has also been weak overall, down 10 percent from the four-week average a year ago. US consumption is recovering slowly, especially as millions of people restrict leisure travel with cases surging nationwide.