ECONOMICS > Turkey welcomes 'late' investment note by Moody's


Moody’s has lifted Turkey’s investment grade to ‘Baa3’, indicating a stable outlook, with the government and business people evaluating it ‘correct but late’

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Economy Minister Zafer Çağlayan and Deputy Prime Minister Ali Babacan said that the credit ratings increase was long due.

Economy Minister Zafer Çağlayan and Deputy Prime Minister Ali Babacan said that the credit ratings increase was long due.

Turkey earned its second investment-grade credit rating on May 16 with an upgrade to Baa3 by Moody’s Investors Service, which has been awaited and accepted as “already deserved” by the country for a long time. Baa3 is a factor that now allows more investors to put money to work in an economy whose rapid growth has recently tapered.

Moody’s said the decision to lift the rating one notch and put a stable outlook on the credit was based upon structural improvements in the economy as well as its public finances that will better insulate it from external shocks.

“Since the beginning of 2009, Turkey’s debt burden has fallen by 10 percentage points to a manageable 36 percent of GDP, and Moody’s expects this decline to continue in the coming years,” the statement said.

Moody’s decision brings it in line with Fitch Ratings, which put Turkey at investment grade BBB-minus with a stable outlook in November. Standard & Poor’s rates Turkey one notch below investment grade at BB-plus with a stable outlook.

“I think something to bear in mind with Turkey is that while the economic and public finance metrics are generally stronger than those of Baa3-rated peers, balancing it out are the external vulnerabilities that are generally greater than those of other Baa3 issuers,” Sarah Carlson, a senior credit officer with Moody’s in London, said in a telephone interview. “And those external vulnerabilities do take time to address through the kind of structural measures that the government has taken,” she added.

Earlier that day, Turkey’s central bank cut its benchmark interest rates by 50 basis points in a bid to stimulate an economy that has experienced rapid growth but faltered in the past year.

‘Decision correct but late’

Immediately following the upgrade, Turkish Deputy Prime Minister Ali Babacan, issued a statement in Turkish saying the upgrade brings market indicators and credit rating more in line.

“This decision is as correct as it is late. Due to the right steps that we have taken on the economy, our country’s indicators in global markets have for a long time been on a similar level as those countries with investment-grade credit ratings,” Babacan said.

Finance Minister Mehmet Şimşek, in an email to Reuters said: “This rating will increase access to international financing for our Treasury and our companies, reduce the burden of borrowing and will positively contribute to our country’s long-term growth.”

The Minister of Technology Nihat Ergün stated that the funds, which had not been invested in Turkey due to their regulation, would be used to make long-term investments in Turkey after this rating upgrade. Ergün added that they were expecting that notch upgrading would continue in advance.

“Foreign investments that come to Turkey could rise from $10 billion to $30 billion or $40 billion. Economic conditions and international conjuncture are available for it,” said Erdal Tanas Karagöl, the economy director of Turkey’s Foundation for Political, Economic Social Research (SETA) in an interview with Anatolia news agency.

Moody’s upgrade of Turkey happened while Turkish Prime Minister Recep Tayyip Erdoğan is visiting the United States for talks with U.S. President Barack Obama.


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Notice on comments

american american

5/18/2013 3:59:14 PM

just a year ago these companies were zionist controlled organizations hellbent on slandering turkey....now you ask where the hate is? hahaha

OZman Cometh

5/17/2013 5:17:43 PM

Haters are gonna hate, so TT, CG, DKI and DT let's accept the upgrade and hope for more growth. Ultimately it comes back to the golden rule...he who has the gold..rules! The richer TR and the citizens get, the louder our voice will be which will annoy the haters even more.

mara mcglothin

5/17/2013 4:21:00 PM

Always ulterior motives for everything that goes on in the World right DOGAN?


5/17/2013 3:36:23 PM

Aferin Turkiye for this improvement. However as I stated in my comment in BB's article, I believe that Turkey's ability to attract investments is mostly due to relatively cheap workforce. The real problems begin when the workforce demands bigger wages proportionate to the growth of economy. This can prove difficult to manage. Time will show...


5/17/2013 12:15:55 PM

@True Turk, indeed, they got nothing to blame, that is why they are here in first place, shame on those Turks allowing the Turk haters to provoke between left and right, Muslim and the secular. We have to see that those who bash the Turkish government also bash the Turkish Republic of Northern Cyprus, so we might have different views on politics or society but we should stick together and only applaud constructive opposition, where Turkey can only benefit from.

dogan kemal ileri

5/17/2013 11:40:52 AM

Spot on Chris and True Turk because you can clearly see it was time Turkiye was rewarded by the USA so Obama has clearly flicked the switch.She was also promise fair treatment by the USA ( and so far not by the EU) in the forthcoming trade agreements between them. The catalyst for all this was Netenyahu's apology to Turkiye about the flotilla incident and Erdogan's complicit acceptance so clearly engineered by the USA. Still its good for business and that's what counts.

Chris Green

5/17/2013 10:20:10 AM

True Turk: I was delighted to read recently that Turkey is now free of the yoke imposed by the IMF thus allowing the latter to concentrate on more pressing matters such as the regional economic minnows such as Greece and south Cyprus. I do think, however that these credit ratings could be used for political means unless the independence of these agencies is closely protected.

True Turk

5/17/2013 9:41:40 AM

It's curious that when there is any good news for Turkey that "anything Turkish" haters are absent from making a comment. The silence is deafening.
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