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Turkey Banks Face Rising Pile of Restructuring Demands

  • Plunge in lira is causing foreign-borrowing costs to soar
  • Higher interest rates may add more pressure on debt repayments
City Life And Currency Exchanges As Turkish Lira Rebounds

Photographer: Ismail Ferdous/Bloomberg


Turkish banks are learning that all good things come to an end. After piling on corporate loans only a few years ago, lenders are now facing a surge in demand from companies seeking to reorganize debt repayments.

The rise in restructurings threatens to spur an increase in unpaid loans as a plunge in the nation’s currency causes the cost of corporate Turkey’s foreign-currency debt -- equal to about 40 percent of economic output -- to surge. An interest-rate increase to try and stem the lira’s decline is also pushing up borrowing costs as the country’s biggest businesses seek to rearrange almost $20 billion of loans.