Peace to rise Turkey’s rating, says Moody’s

Peace to rise Turkey’s rating, says Moody’s

ISTANBUL - Reuters
Peace to rise Turkey’s rating, says Moody’s

Rating agency Moody’s says Turkey’s progress to find a peaceful solution for the Kurdish issue is a good step to boost investor confidence in the country. DAILY NEWS photo, Emrah GÜREL

Ratings agency Moody’s said yesterday that Turkey’s progress towards peace with Kurdish militants was good for its credit rating, which it currently has just below investment grade.

“The prospect of peace promises to boost investor confidence and improve southeastern Turkey’s attractiveness as a destination for foreign direct investment,” Moody’s said.

Moody’s, which rates Turkey at Ba1 with a positive outlook, said the government’s agreement to form a parliamentary investigative commission to evaluate the process was a “visible and credit-positive step” in its progress toward peace.

“The conflict in the country’s southeast has been a longstanding source of political uncertainty constraining Turkey’s creditworthiness,” Moody’s said in its Credit Outlook publication.

The proposed establishment of a parliamentary commission was the strongest signals to date that peace talks were building momentum, it said. 

In January, Moody’s said Turkey needed to improve its resilience to external shocks by narrowing its current account deficit or boosting foreign reserves.

Standard & Poor’s raised Turkey to within a whisker of investment grade on March 27, citing a rebalancing economy and progress in a Kurdish peace process. Standard & Poor’s said in January it would no longer offer a full rating service for Turkey due to a spat between the agency and Turkish government. 

Fitch upgraded Turkey to an investment grade of BBB- in November. Meanwhile, Moody’s and Standard&Poor’s have upgraded long-term corporate credit rating of Koç Holding, Turkey’s largest conglomerate by assets, to “investible,” the company announced yesterday.