Turkish firms and government face $3.8 bln bond crunch in October

LONDON - Turkey and its firms face repayments of nearly $3.8 billion on foreign currency bonds in October as the country struggles with a plunging lira that has lost more than a third of its value since the start of the year.

Emerging market (EM) investors have been worried about Turkey's external debt burden and the ability of its firms and banks to repay after a boom in hard currency issuance to help finance a rapidly growing economy.

For companies, the cost of servicing foreign debt has risen by a quarter in lira terms in the past two months alone.

"Turkey's external financing requirements are large," Jason Daw at Societe General wrote in a note to clients. "It has the highest FX-denominated debt in EM and short-term external debt of $180 billion and total external debt of $460 billion."

Calculations by Societe General show that Turkish firms will face $1.8 billion of hard-currency denominated bonds maturing by the year-end while $1.25 billion of government bonds will come due. Additionally, a total of $2.3 billion in interest must be paid.

The heaviest month for repayments is October, when $3 billion in principal and $762 million interest are due.