Turkish Deputy PM Yilmaz expects Fitch to keep Turkey’s investment grade

By bne IntelliNews September 17, 2015

Deputy PM Cevdet Yilmaz, who is in charge of the economy, said on September 17 that he did not expect Fitch to change its Turkey ratings. Fitch that rates Turkey at BBB- with stable outlook will update its assessments on Friday (September 18).

The rating review comes at a time when Turkey faces heightened political uncertainties and escalating violence with the Kurdish Workers’ Party (PKK), while the prospects of a U.S rate hike is another risk for Turkey, whose currency has already lost more than 20% of its value against the dollar this year. Turkey’s heavily reliance on external funding leaves the country vulnerable to a sudden shift in investor sentiment.

Fitch last week identified Turkey as one of the emerging markets most exposed to a rise in US interest rates. Turkish banks still has the largest share in foreign borrowing, and as a result still vulnerable to exchange rate fluctuations, warned the rating agency in an article published on September 11.

In its last assessment in March Fitch confirmed Turkey’s credit rating, saying that the country’s ratings are based on a number of key assumptions, including continued commitment to fiscal sustainability, and no sharp escalation in geopolitical risk to a level that would be disruptive for the economy.

Deputy PM Yilmaz also told TV channel NTV that he expects the Turkish economy to grow by around 3%.

Turkey’s $800bn economy grew by 3.8% y/y in the second quarter, up from 2.5% y/y in Q1. But, the economic growth may slow in the remainder of the year if the November elections produce another hung parliament and clashes with the PKK continue, further depressing consumer confidence and business sentiment.

Turkey's Ratings      
  Rating Outlook Last Action
Fitch BBB- Stable March 20, 2015
Moody's Baa3 Negative April 10, 2015
S&P BB+ Negative May 8, 2015
Source: Rating Agencies  

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