Protests put projects at risk, says Moody’s

ISTANBUL- Hürriyet Daily News

Moody’s has warned that if the anti-government protests continue and intensify, it could negatively affect the Istanbul Metropolitan Municipality’s ambitious urban development plan and its ability to self-finance large investment requirements through asset sales.

After expressing concerns over the impact of the protests on the economy of the country, the rating agency yesterday said “the city where everything began could suffer in a different respect.”

Moody’s said Istanbul needs to borrow to sustain its giant infrastructure projects, but the latest developments damage the allure of its assets. “The city has benefited directly from a strong real estate market by selling plots for development in addition to other assets and using the revenue to fund its infrastructure program,” it said.

It also noted the significance of asset sales for the city, saying they contributed 6 percent to Istanbul’s total revenue in 2012 and 19 percent in 2011.

Moody’s recently upgraded the issuer rating of the Istanbul Metropolitan Municipality on May 22, citing rising surpluses, disciplined financial management, and close oversight of municipal-related service companies. Istanbul has been the showcase of the government’s neoliberal policies, which it has promised to boost with multi-billion dollar giant infrastructure and transportation projects. Canal Istanbul, the third Istanbul airport, the Marmaray rail tube project and the third bridge are among the most prominent projects.

Moody’s predicts that the ongoing protests may endanger the financing of these giant projects too, as it could discourage foreign direct investment and decrease the attractiveness of city-owned properties for sale. It also mentions that foreign direct investments in Istanbul soared by almost 90 percent to $1 billion in 2011 from 2010.