Moody’s: Political uncertainty in Turkey poses minimal risk for non-Turkish companies

“We expect the credit impact of developments in Turkey to be negligible, if any at all, for most non-Turkish companies that operate in the country. Most are multinational companies that benefit from international diversification, and in some cases, the inelastic demand for their products, such as tobacco. Travel companies’ exposure is largely offset by bookings to other destinations,” said Richard Morawetz, a Moody’s Group credit officer for the Corporate Finance Group and author of the report.

Multinational consumer products firms have limited exposure to Turkey in the context of their global operations, said the report. 

Major EMEA auto manufacturers are all present in Turkey, although the country only represents a small fraction of their overall output. In addition, the majority of auto production in Turkey is exported, which suggests that it is more reliant on foreign sales rather than on domestic demand, added the report. 

“Rated travel companies such as TUI AG (Ba2 stable) and Thomas Cook Group plc (B1 stable), for whom Turkey is an important holiday destination, are sufficiently diversified that the recent slump in bookings to Turkey - which predates the failed coup attempt [on July 15] - is being largely offset by bookings to other destinations,” noted the report. 

“Developments in Turkey are immaterial for most of Moody’s rated construction companies in EMEA. The Italian construction company Astaldi S.p.A. (B2 negative), has significant activities in the country, although we understand that construction work has been progressing as scheduled and significant Turkish concession assets have been delivered on time,” it added.