Foreign investors in talks over Turkey’s problem loans, asset manager says

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ISTANBUL, April 6 (Reuters) – Foreign investors are interested in some of Turkey’s $47 billion in problem loans and are in talks with asset management firms and banks, the head of the main manager said of Gelecek Varlik assets.

Chief executive Sezin Unludogan told Reuters the surge in interest was mainly spurred by a regulation late last year that opened up the market to foreigners, and was helped by recent turmoil in the markets. Russian emerging markets.

Turkish banks hold some 700 billion lira ($47.5 billion) in watchlist and non-performing loans (NPLs). The bad debt problem has simmered for three years as efforts to address it, such as transferring them to a fund or an asset management company, have failed.

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A new law implemented by the Capital Markets Board late last year opened the door for foreigners to invest in NPLs, Unludogan said.

“A few transactions and investments could be completed this year,” he said, adding that foreigners are particularly interested in distressed loans worth $20 million or more.

“Also, their interest could shift to Turkey from markets like Russia where it is difficult to invest due to sanctions,” said Unludogan, of which Gelecek Varlik is one of the largest asset managers in Turkey. Turkey.

Foreign companies were first attracted by the potential for large returns from distressed debt after a currency crisis in 2018. Reuters reported that U.S. firms Bain Capital, Goldman Sachs and the European Bank for Reconstruction and Development ( BERD) were among those interested in Turkish NPLs. in 2019.

Turkish banks currently have some 535 billion lira in “stage 2” loans, which are overdue, and an additional 160 billion lira in NPL. Some 50-75 billion lira of stage 2 loans would become NPLs this year, Unludogan said.

When the COVID-19 pandemic hit in 2020, the banking regulator relaxed loan classification rules, which slowed the rise in NPLs and helped companies struggling with cash flow. But that classification grace period ended in September.

Turkey’s NPL ratio was 3.02% at the end of February, compared to 5.36% at the end of 2019, due to the forbearance measure and also a spike in cheap credit.

($1 = 14.7389 lira)

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Written by Ebru Tuncay; Editing by Jonathan Spicer, Alexandra Hudson

Our standards: The Thomson Reuters Trust Principles.

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