S&P cuts Turkey credit rating outlook to stable from positive.

By bne IntelliNews May 2, 2012
Standard & Poors said on May 1 that it revised the outlook on Turkeys long-term foreign and local currency sovereign credit ratings to stable from positive. Less-buoyant external demand and worsening terms of trade have made economic rebalancing more difficult, and have increased the risks to Turkeys creditworthiness given its high external debt and the state budget's reliance on indirect tax revenues, S&P explained in a statement. The action reflects S&Ps view that the ratings are likely to remain at the current level during the next 12 months, the rating agency furthered. S&P calculates that the countrys gross external financing needs will reach 142% of current account receipts in 2012, one of the highest ratios for a rated sovereign. This heavy reliance on external savings exposes Turkey to shocks, either domestic-for example if recent high domestic credit growth were to result in future bad loans-or external, if rising risk aversion were to deter foreign investors and banks and result in a net outflow of foreign capital S&P said.
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