The credit rating agency Fitch has upgraded Turkey’s ratings for long-term borrowing in both domestic and foreign currencies to investment grade, assigning them a stable outlook.
The rating for long-term borrowing in foreign currency has been raised to ‘BBB-‘, from ‘BB+’. For long-term borrowing in domestic currency, the rating has increased to ‘BBB’, from the previous ‘BB+’. The outlook for the ratings is stable.
Among the reasons for the improved creditworthiness ratings, Fitch highlights Turkey’s fundamental strengths, including a declining moderate government debt, a healthy banking system, favorable medium-term growth forecasts, and a relatively rich and diversified economy. Also noted are the reduced risks for the Turkish economy in the near future.
– The upgrade to investment grade reflects a combination of reduced macro-financial risks for the economy of that country in the near future, considering it is on the path of a mild slowdown in economic activity – states Fitch’s announcement.
They also note that they believe the Turkish economy is on the path to restoring sustainable growth, pointing to a reduced current account deficit following last year’s overheating and a decreased inflation rate.
Emerging markets strategist Manik Narain from Swiss bank UBS states that many investors consider Turkey to be a country that is almost already in investment grade. “Ultimately, however, today’s rating upgrade will generate real investment flows and lower the borrowing costs of that country,” explains Narain.
