Turkish Banks' Ability to Extend Debt Is Key in Crisis

Investors are watching closely to see whether Turkish banks will maintain access to the foreign funding they need to keep economic activity humming, as the economy is battered by U.S. sanctions, rating cuts, concern about a looming fine on a state bank and a plunging lira.

Turkish lenders have a good record of foreign borrowing even at the height of a financial crisis and are strong enough to weather a slowdown, according to bank executives. But the nature of the current crisis raises the possibility of a new set of external shocks, most notably from the U.S., which is retaliating with economic attacks against Turkey’s imprisonment of American citizens and employees of the U.S. diplomatic mission.