Turkish corporate bad loans jump 78% as agriculture debt triples

Turkish corporate non-performing loans rose 78.1% year on year to 634 billion lira on Nov. 15, banking data showed, as agricultural bad debt surged.

The expansion in liquidation-stage corporate debt underscores mounting balance-sheet pressure under tight monetary policy, compared with lower default rates recorded during the prior year. Turkish five-year credit default swaps held steady near 265 basis points following the release.

Corporate debt sent to liquidation reached the 634 billion lira threshold after steady increases throughout the past 12 months, data showed. Banking institutions classified the receivables under formal workout procedures to contain broader systemic exposure.

Agriculture defaults lead corporate strain

Non-performing loans in agriculture jumped 221% over the twelve-month period, the steepest increase among all monitored industries, according to banking data. The rise reflects sustained operating cost pressures and higher debt-servicing expenses for commercial producers.

Manufacturing segments also recorded deteriorating credit quality, with problematic loan balances expanding across the machinery and chemicals industries. Lenders have increased loan-loss reserves as cash flows weaken among industrial producers facing higher financing costs.

The banking regulator is scheduled to review corporate sector leverage metrics on Nov. 27, when officials assess whether to adjust commercial loan classification rules.