S&P upgrades Turkeys ratings.

By bne IntelliNews February 22, 2010
Standard & Poors (S&P) raised long-term foreign currency and local currency sovereign ratings of Turkey to BB and BB+, respectively. S&P also affirmed the B short-term ratings with the positive outlook. The transfer and convertibility assessment was raised to BBB-from BB+ while the trAA+/trA-1 national scale ratings were affirmed. Credit analyst with S&P, Frank Gill says that the upgrade reflects the governments improving economic policy flexibility as a result of its strong track record in steadily reducing the debt burden over the past decade. Gill asserts that the countrys large gross external financing needs represent the key rating risk, because a change in investor sentiment could weigh on economic growth and public finances. S&P expects external financing needs over current account receipts and usable reserves to remain close to 130% between 2010 and 2012. Gill also notes that the positive outlook on Turkey reflects the likelihood of an upgrade over the next 12-24 months if the rating agency considered that a deeper financial and capital markets stabilisation and the countrys success in weathering the global turmoil allowed it to return to its prior rates of growth with less dependence on external funding. But, Gill explains, S&P would consider lowering the rating if external pressure mount and if the countercyclical fiscal slippage is not reversed.

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