Moody’s changes outlook on Turkey’s government bond rating to negative.

By bne IntelliNews April 11, 2014

Moody’s on Friday said it changed the outlook on Turkey’s Baa3 government bond rating to negative from stable, citing increased pressure on the country's external financing position and weaker near-term GDP growth prospects. Moody’s at the same time affirmed Turkey’s Baa3 rating at its current level.

Moody’s explained that its decision to change the outlook to negative prompted by the following drivers: (i) increased pressure on the country’s external financing position driven by heightened political uncertainty and lower global liquidity, adversely affecting foreign and domestic investor confidence, and (ii) in a context of a slowing near-term outlook for GDP growth, growing uncertainty about medium-term growth trend because the prospects for growth-enhancing structural reforms may be diminished in the more uncertain policy environment that is accompanying the domestic political turbulence.

While domestic political risk had been material in Turkey -notwithstanding the conclusion of recent municipal elections- developments since December 2013 highlight intensifying internal political divisions, Moody’s said. The rating agency expects these tensions in the political arena to persist until at least the second quarter of 2015, when parliamentary elections are due.

Moody’s also said it expects a cyclical slowdown due to lower global capital flows, which will dampen consumption and investment. This will in turn slow down growth to 2.5% in 2014 and 3% in 2015 (down from the 4% growth rate registered in 2013 and below the 4% medium-term trend growth), Moody’s stressed.

Related Articles

Four Turkish companies reportedly consider IPOs in London or Istanbul

Turkey’s Enerjisa, Memorial Health Group, Tab Gida and Baskent Gaz are considering public offerings in London or Istanbul, unnamed sources told Bloomberg on July 19. Enerjisa, a 50:50 JV ... more

Turkey bars entry to thousands from more than 140 nations over suspected IS ties

Turkey has arrested and deported thousands of people suspected of having links to the Islamic State group according to a Turkish interior ministry report entitled “Turkey’s Fight ... more

Evolution Equity Partners closes $125mn cybersecurity-focused fund

Evolution Equity Partners announced on 17 July the final closing of a new fund with total capital commitments of $125mn to make investments in cybersecurity and next generation enterprise software ... more

Dismiss