The Turkish Holding Companies (HC) have been and are expected to remain among the key players in the Turkish industrial and financial sectors, reports Fitch Ratings. Understanding HC structures and its relations with its group companies helps to identify the major risks for HCs and their subsidiaries, which usually carry most of the group's debt and provide liquidity.
In its report, Fitch focuses on the key characteristics of HC and the main tools it uses during its credit rating assessments. The agency covers a variety of issues such as quality of management, inter-group support, structural subordination and cash flows. It states that operational diversification, the performance of core operating units, sector ceilings, market positions and multi-national affiliations are among important factors that the agency gives emphasis to during its business risk assessment. Furthermore, in its financial risk overview, Fitch analyses sources of cash, debt structure, treasury management and the financial performance of each subsidiary.
Fitch says that the usage of IAS financials leads to a better transparency and facilitates both financial analysis and peer group comparisons, which are essential elements of the agency's analysis. It further comments that ratings of the HCs themselves, which typically have little in the way of operating assets or operating cash flow, may sometimes, have a one-notch discount to reflect structural subordination. — (menareport.com)
© 2003 Mena Report (www.menareport.com)
