Standard & Poor’s Ratings Services yesterday said it raised its long-term foreign currency and local currency sovereign credit ratings of Turkey to BB from BB- and BB+ from BB, respectively, with a positive outlook.
“The upgrade reflects our view of the Turkish government’s improving economic policy flexibility as a result of its strong track record in steadily reducing the debt burden over the past decade,” said Standard & Poor’s credit analyst Frank Gill. “It also reflects our opinion of the success of Turkey’s regulatory institutions in preserving the solidity of the financial sector, despite external adversity. Standard & Poor’s believes Turkey’s banking system to be one of the strongest and least-leveraged in Eastern Europe,” he added.
The ratings on Turkey remain supported by the government’s overall track record of sound economic and fiscal management, according to Standard & Poor’s. “Since the primary general government budget operated an average surplus of 5 percent of gross domestic product [GDP] from 2004-2008, Turkey’s ability to at least balance the primary budget would appear to be very solid,” Mr. Gill said. “The positive outlook on Turkey reflects the likelihood of an upgrade over the next 12-24 months if we considered that a deeper financial and capital markets stabilization and the country’s success in weathering the global turmoil allowed it to return to its prior rates of growth with less dependence on external funding,” he said.
This upgrade represents the fourth for Turkey in the span of three months, as international credit rating agency Moody’s recently upgraded Turkey’s government bond rating from Ba3 to Ba2 with a positive outlook, and Fitch upgraded Turkey’s long-term foreign currency issuer default rating (IDR) from BB- to BB+. The Japan Credit Rating Agency (JCR) upgraded Turkey’s foreign and local currency long-term senior debts from BB- to BB, with a stable outlook on the rating earlier in the month.
