The earthquake that hit Turkey in August is the latest disaster for the tourist industry, after the arrest of Abdullah Ocalan and the consequent threats from the Kurdistan workers party, the PKK, had combined with the war in Kosovo to lead to a downturn in tourist visits to the country.

What impact all this will have on Turkey's securitization is far from clear, but Mitchell Lench, head of Duff & Phelps' (DCR) Emerging Markets Structured Finance Group for Eastern and Central Europe, the Middle East and Africa, expects the long-term effect to be slight. "My own feeling is that we will probably see some decline in the short term and then probably a rebound," he said. "It's a perception issue; the tourist mentality is to react when they hear something negative, but that will resolve itself in the future."

He added that the earthquake had not directly affected the tourist resorts but that the agency would keep a close eye on tour cancellation figures.

Another rating agency expert agreed with Lench's assessment. "Obviously the earthquake is going to effect tourism in the short term, but by Christmas and then next summer, it won't make much difference. The things that could have made a longer-term impact, such as a sustained PKK bombing campaign, have not happened," he said.

DCR rates six credit card voucher-backed securitizations in Turkey and has put one of those deals a triple-B rated $130 million deal from Turkiye Vakiflar Bankasi (Vakifbank) on ratings watch. This was because of a drop in receivables, which saw the transaction's coverages fall to close to downgrade trigger levels in April and May.

Lench said that this decline was partly because of the drop in tourist numbers but also due to increased competition in the credit card voucher processing market.

While the last couple of months have seen an upturn in the receivable generation, partly as a result of Vakifbank taking action to improve its competitive position, such as lowering the commissions it charged merchants, the receivables are still below the level they were at this time last year, he added.

Turkey has also seen transactions backed by trade payment rights, such as one issued earlier this year by Turkiye Garanti Bankasi, but securitization experts agreed that such deals will remain largely immune from any effects of the earthquake, even though the area worst affected was one of the country's industrial heartlands. A Garanti official pointed out that as its transaction boasts coverage levels of 14 times there is little for investors to worry about.

In fact, the success of structured finance pros in convincing Turkish banks of the benefits of securitization over the last couple of years Turkey has been one of the few non-Latin American emerging markets to see a regular deal flow may have a more significant impact on future activity.

For instance, not only are investors who buy emerging market future flow transactions, principally in the U.S., already well-exposed to the country, but the necessity to generate receivables to cover credit card deals has led to increased competition in the voucher processing business. In the absence of an increase in the number of tourists visiting Turkey, any further deals will only accentuate this process and lead to the rating agencies tightening their coverage numbers, making deals more expensive, experts agreed.

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