International credit rating agency Moody’s has announced that it has placed on review for downgrade the ratings of 11 non-financial corporates based in Turkey, including Turkish integrated steelmaker Eregli Demir ve Celik Fabrikaları T.A.S. (Erdemir). These rating actions follow Moody's recent decision to place Turkey's Ba2 government bond rating under review for downgrade.
Moody's stated that the review will assess the credit implications and potential vulnerabilities on each of the company's ratings in the context of a currently challenging operating environment. In particular, Moody's will assess the impact of the macro-economic environment on the various companies' liquidity profiles and ability to refinance approaching debt maturities, valuations and the weakening lira on costs structures and foreign currency debt obligations.
Regarding Erdemir, Moody's stated that the company’s Ba2 rating under review for downgrade reflects the healthy financial profile of the company and its well-established market share in Turkey as a leading domestic steelmaker. However, the company's credit linkages with Turkey constrain the rating given that all of the company's core assets are located in Turkey and the vast majority of its revenues and cash flows are generated domestically. The review for downgrade is therefore a direct result of the change in Turkey's government bond rating.