Moody’s cuts Turkey debt rating to junk

692

Moody’s has downgraded Turkey’s sovereign bond rating to junk. The ratings agency said the country’s finances had weakened amid increased political turmoil after the July coup attempt that stopped necessary reforms.

Moody’s cut Turkey’s key bond rating by one notch to junk level, citing mounting political and economic risks.

It added that the government’s reaction to the July coup attempt had set back expected reforms and the rule of law.

“Turkey’s external vulnerability has risen, both over the past two years and more recently as a result of unpredictable political developments and volatile investor perception,” Moody’s said in a statement.

Fitch the odd one out

The ratings agency emphasized it expected growth to slow over the coming years, “as constraints on the externally-funded, consumption-fueled Turkish economy emerge.”

 Losing its investment grade will make it more expensive for Turkey to raise capital on global markets.

S&P downgraded Turkey as early as July, following the failed coup, meaning that only Fitch remains as a major agency keeping Turkey above junk level.

Moody’s for its part insisted there was a risk of a sudden, disruptive reversal in foreign capital flows and a risk of a more rapid fall in reserves, which might even lead to a balance-of-payment crisis in Turkey.

Even prior to the coup attempt, the nation’s tourism sector had been battered by both terrorism concerns and a diplomatic row with Russia, which resulted in trade sanctions.

hg/jd (AFP, dpa)

SHARE