Turkish bond prices fell on March 13 as a growing set of economic and political anxieties left investors fretting. To add to the darkening picture, credit default swaps for Turkey rose while the Turkish lira (TRY) hit a record low against the euro and plumbed its weakest level against the dollar since last December.

Phoenix Kalen, a strategist at Societe Generale, told Reuters that investors had been reducing long positions in the aftermath of the Moody’s ratings downgrade last week. Moody’s cut Turkey further into junk citing a weakening of institutions, short-term economic stimulus that could prove damaging longer term and rising current account risks. Its move drew a frosty response from Turkish President Recep Tayyip Erdogan who accused the international credit rating agencies of being preoccupied with trying to drive Turkey into a corner.

“The underperformance of the bonds also relates to the large February issuance, where a lot of investors participated with the expectation of lower inflation outturns,” she said. “So when the February CPI missed... this resulted in some bond selling,” Kalen reportedly said. Eurostat said core inflation in Turkey is running at 12% y/y.

Among other developments jangling the nerves of investors were the overheating economy, the surging current account deficit recorded for January and the March 13 passing by Turkey’s parliament of a controversial voting law that the opposition said could pave the way to fraud in national elections scheduled for next year. The prospect of Turkey’s military incursion into the Afrin region of northern Syria moving towards a possible final showdown was additionally weighing on investor sentiment.

Analysts are going bearish on Turkey given that because of its high external borrowing requirements its economy is seen as one of the more exposed to US interest rate rises and global yields are on the rise.

The TRY has devalued 1.8% this month against the US dollar. It fell to TRY3.8715 on March 13 from TRY3.8 at the end of February and sunk to an all-time record low against the euro of TRY4.7761.

The yield on the country’s benchmark 10-year local currency bond, meanwhile, reached 12.75% from the 11.58% seen as the month got under way, the highest registered mark since November last year. Turkish assets were in fact under pressure across the board, with Turkey’s January 2041 eurobond down 0.6 cents to 93.74 cents in the dollar, the lowest level since early February 2017, according to Thomson Reuters data. The April 2043 issue also fell 0.5 cents to 80.3 cents in the dollar, the lowest since end-January 2017.

Turkish five-year credit default swaps were up five basis points (bps) from March 12’s close to 174 bps, IHS Markit data showed, posting a one-week high.

“The lira’s sell-off was triggered by the higher than expected current account deficit published on Monday—a timely reminder of Turkey’s reliance on capital inflows to cover its substantial gap,” analysts at Rabobank said in a note to investors.