Steep spreads in the Eurobond market may provide incentives for Turkish banks to issue deals backed by diversified payment rights (DPRs) this year, said Standard & Poor's in a text box accompanying a video presentation on Turkish DPRs.
DPRs are related to cash flows processed by these banks. These flows come in the form of export payments, inward foreign investment, as well as worker remittances.
In the video, S&P director Eric Gretch said that main catalyst for Turkish banks to do DPR transactions has essentially remained the same since the sector started up in 2003. Basically it is to obtain investment-grade ratings for these deals, above the sovereign's sub-investment grade 'BB' on its long-term foreign currency obligations.
Despite eurozone volatility - the continent is, after all, right next door - Gretch expects the creditworthiness of Turkish DPR deals to remain steady this year. "
“We expect DPRs to be quite stable in 2012 despite projections for a drop-off in flow volume," Gretch said, attributing a fall in exports and investment to the eurozone crisis. "Nevertheless, we have forecasted that even with a 30% decline across the DPR program in asset volume, we will still maintain stable ratings."