LONDON, April 17 (Reuters) – Tighter global financing conditions are putting pressure on emerging market banking systems, with those in Turkey and Tunisia most at risk, ratings agency S&P Global said in a report on Monday.
S&P said its base-case scenario was that Turkish banks would retain access to external funding, but with a moderate decline in rollover rates as long as the government contains balance-of-payment risks.
“We consider that Turkish banks are particularly vulnerable to negative market sentiment, increased risk aversion, reductions in global liquidity, and higher financing costs,” S&P’s analysts wrote in a note.
The country’s banks also remain significantly exposed to the unwinding of economic imbalances built up in recent years, such as a surge in real estate prices and highly accommodative monetary policy amid hyperinflation
Lira weakness also weighs on the credit worthiness of Turkish firms, the agency added.
