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MULTIMEDIA
May 27, 2012
 
 
 
 
 
 

Babacan: Strong policies reflected by Turkey’s credit rating upgrades

22 February 2010 / TODAY’S ZAMAN, İSTANBUL
An eased debt burden along with directed government policies to stabilize and reform economic policy led to the upgrading of Turkey’s credit rating in an environment where nearly 100 downgrades have occurred, Deputy Prime Minister Ali Babacan has said.

Babacan, speaking to the Anatolia news agency, noted that government policies which eased Turkey’s debt burden, strong and realistic expectations of economic growth set out in the Medium Term Program (OVP), bank sector reform, social security reform in 2008 and not becoming indebted in the difficult year of 2009 led to the upgrade on Friday of Turkey’s credit rating by international credit rating agency Standard & Poor’s.

Standard & Poor’s upgraded Turkey’s long-term foreign currency and local currency sovereign credit ratings by one grade to BB and BB+, respectively, the latest in a series of upgrades recognizing Turkey’s stability during the financial crisis and its decreasing debt levels.

Regarding the trials that European nations like Greece and Spain are facing with regard to debt levels, Babacan stated that strong economic policies paved the way for four separate agencies -- Fitch, Moody’s, JCR and now Standard & Poor’s -- to upgrade Turkey’s credit rating, a feat all the more impressive when taking into account that 40 other nations, including Greece, Portugal, Ireland, Russia and Mexico, saw downgrades after a crisis beginning with the collapse of Lehman Brothers, Babacan highlighted.

“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 positive outlook attached to the upgrades reflects the likelihood of another upgrade over the next 12 to 24 months, a press release on the agency’s Web site revealed. This would bring the credit rating up to investment grade levels, according to Onur Mutlu, a research manager at Gedik Investments. HSBC Strategist Fatih Keresteci noted that this step by S&P came “late,” adding that the positive outlook attached to the rating opened the doors for another upgrade in the near future.

The İstanbul Stock Exchange’s (İMKB) İMKB-100 index started off trading on Friday at 52,449.80, uncertain about how to react to news that the US Federal Reserve would be increasing interest rates on emergency loans to banks. After receiving news about the S&P’s upgrade, stocks shot back up, ending the day at 53,318.97, a 1.66 percent gain on the İMKB-100.

International credit rating agency Fitch upgraded Turkey’s long-term foreign currency issuer default rating (IDR) from BB- to BB+ in December, followed by Moody’s upgrading the government bond rating from Ba3 to Ba2 after five years of silence, in January. The Japan Credit Rating Agency (JCR) was third in a three-month period, upgrading its foreign and local currency long-term senior debts from BB- to BB at the beginning of the month.
 
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© Feza Gazetecilik A.Ş. 2007, Ahmet Taner Kışlalı Cad. No: 6, Bahçelievler - İstanbul 34194 Turkey, +90 (212) 454 1454, +90 (212) 454 1497(fax)