The U.S.-based credit rating agency Moody's said yesterday it did not expect a significant effect of the liquidation of the U.K.-based tour operator on Turkish banks while noting the collapse is credit negative for Bulgarian, Cypriot and Greek banks as tourism declines.

Moody's said the collapse would weaken the cash flow of business in those countries' significant tourism and related sectors, potentially leading to higher credit impairment and loss of businesses.

"The compulsory liquidation of Thomas Cook and the resultant decline in tourism revenue and investment in these three countries will weaken the credit standing of businesses that worked with the now failed company and relied on payments from it, such as hotels and related businesses, including small enterprises that provide auxiliary services," according to the Moody's analysis.

It added that each hotel has a separate contract with Thomas Cook, but according to reports, the company would owe significant amounts to hotels for stays in July and August because in certain cases it made payments 60-90 days after the trips themselves.

"We do not expect Thomas Cook's compulsory liquidation to significantly affect Turkish banks," the agency said in its analysis. "Although Thomas Cook had significant operations in Turkey, they were relatively small in the context of the country's large and diversified tourism industry," it added.

Thomas Cook brought around 700,000 tourists to Turkey annually, which is a small fraction of the more than 39 million overseas visitors in 2018, and we expect the flow of tourists from Thomas Cook to be replaced by other operators, Moody's said.