The failed coup in Turkey is spotlighting a problem that threatens to sandbag emerging markets more broadly: burgeoning private debt. In the wake of Turkey’s political turmoil, credit-rating firms warned this week that heightened uncertainty threatens to undermine the country’s economy and the ability of companies to repay their debts. Standard & Poor’s Global Ratings on Wednesday cut Turkey’s credit rating to double-B, deeper into junk territory. Moody’s Investors Service is weighing a downgrade. ...
Rising levels of domestic debt in emerging markets such as Turkey, China and Russia could undermine economies and restrict growth, according to insiders. Turkey's domestic debt has risen to 70% of gross domestic product in 2015, compared to 20% in 2008, while foreign debt has remained relatively unchanged at 10%. China's levels almost quadrupled following the 2000 financial crisis. Nick Eisinger, fund manager at Vanguard Group said although the figures did not imply "armageddon", it did imply a forthcoming era of "muted growth".