S & P and Moody’s lower Turkey’s credit rating note on same day
Two international credit rating agencies have made announcements on the same day, both lowering Turkey’s credit rating note. While S & P left the credit outlook at stable, Moody’s dropped it to negative. On the other hand, S & P also said in its statement a contraction in Turkey’s economy was expected in 2019.
The statement read “Stable outlook reflects balance of risks related to credit notes of Turkey, for the next 12 months. Setting sharp volatility in the balance of payments and the flexibility in Turkish Lira will undermine Turkey’s economy.” The statement also said “the new economic model of the Turkish government is lacking in specific economic proposals.” In May 2018, S & P had changed Turkey’s foreign currency credit rating to “BB-” from “BB” and also lowered its domestic currency note from “BB+” to “BB”.
An unexpected move came from after came from Moody’s on the same day. A statement from the agency said Turkey’s long-term credit rating was dropped to “Ba3” from “Ba2” and the outlook was changed to “negative”.
It was explained in the statement that in case the Turkish authorities provided a harmonious and effective economic plan in the near term, the credit rating would be balanced.
It was also highlighted in the statement in the event of a drop in inflation and a decline in current account deficit the credit rating would be favorably affected and also significant external financing support would contribute in a positive manner.
