Moody’s places Turkey’s credit ratings on review for downgrade

By bne IntelliNews July 19, 2016

Moody’s Investors Service has placed Turkey’s credit rating on review for downgrade saying it needs to assess the effects of the failed military coup.  

Thus Moody's becomes the first of the three leading ratings agencies to consider a rating downgrade for Turkey, which it rates at Baa3. S&P said earlier this week it would assess the implications of the events in the coming days, while Fitch warned that the attempted coup and the authorities' reaction highlight political risks to the country's sovereign credit profile.

The review is driven by the need to assess the medium-term impact of the failed military coup on Turkey's economic growth, policymaking institutions and external buffers, given the existing challenges in all of these areas, Moody’s said in a statement on July 18.

The rating agency believes that despite the coup's failure, its occurrence is a reflection of broader political challenges, as associated credit risks remain elevated.

The review will assess the likelihood and implications of: 1) a sustained slowdown in domestic demand, leading in turn to lower economic growth for the next 2-3 years; 2) a further weakening of policy predictability and effectiveness, as well as a rise in policy inertia; and 3) reduced access to external liquidity, given the country's high external borrowing needs in the face of heightened domestic and international market volatility.

Moody’s is of the opinion that the most recent increase in domestic political uncertainty in Turkey, and most specifically the attempted coup, has the potential to significantly affect the country's growth trajectory negatively.

Turkey’s ratings could be downgraded if the review were to conclude that policy inertia was likely to lead to further delays in implementing the structural reforms needed to reduce external imbalances and sustain economic, fiscal and institutional strength; and/or that the probability has risen of investor risk aversion intensifying pressures on the country's external finances and heightening the risk of a sudden and sustained halt in foreign capital flows.

 

Related Articles

Mongolia completes $5.5bn IMF bailout deal after 2016 slump in growth

Mongolia has reached a $5.5bn bailout agreement with the International Monetary Fund (IMF), the Fund said in a statement on February 19. The deal has been ... more

Poland's real interest rates turn negative as inflation surges in January

Poland's consumer price index grew 1.8% y/y in January, more than doubling its rate compared to December, statistics office GUS announced on February 13. With Polish interest rates sitting at ... more

Azerbaijanis rush to convert dollars into manats after burst of appreciation

The unexpected appreciation of the Azerbaijani manat in February has sent banks into a dollar-selling frenzy, sources in Baku have informed bne IntelliNews. In the past week, the manat has ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss