Once a premium destination for overseas investors, Turkey’s power sector has recently been struggling with the impact of lower-than-expected growth rates, partial market liberalisation and fixed, long-term natural gas contracts. Power generation firms face further stress as the economic impact of the pandemic bites. Efforts to arrange a new debt restructuring deal have been delayed by the virus and wider economic woes, casting uncertainty over future demand. However, the sector retains some high-grade assets, however, which may attract future investor interest.
Turkey’s banks entered the pandemic with some concerning underlying conditions and may need some significant financial ventilation if they are to come through it in good health. Foreign currency debt, depletion of foreign exchange reserves and political interference has added risk, with lenders likely to see increasing stress on their balance sheets in the months ahead. The picture darkens further the longer the health crisis continues.