S&P confident despite Turkey's likely contract withdraw
ISTANBUL- Anatolia News Agency
AA photoOne of the top three global rating agencies, Standard and Poor’s Rating Services (S&P), may continue rating Turkey’s credit, even if the country cancels its contract with the agency, a top executive from the rating firm has said.
Paul Coughling, the executive managing director for global analytics and operations at S&P, said yesterday that although some countries have canceled their agreements with S&P, the organization continues to rate their credit. “Occasionally companies or countries may cancel their agreements with us, but we still continue to evaluate 127 countries.”
The company may carry on rating Turkey’s credit in the event that its agreement is canceled, as it did in the case of France. “In 2000, France withdrew from its deal with us, but we have still been continuing to evaluate its credit. We think France is important in the financial market and for our clients. When you check our score for France, you will see a ‘non-requested rating’ note next to the score,” Coughling said.
S&P dropped Turkey’s outlook from positive to stable on May 1, which closed the doors to a possible upgrade of its credit rating, citing concerns over government debt. However, the same day S&P upgraded its rating for Greece, after Athens completed a major discharge of its debts to private creditors.
Turkish Prime Minister Recep Tayyip Erdoğan accused S&P of being biased for lowering Turkey’s long-term credit outlook and said S&P’s decision was “ridiculous.”
“We sign a contract with S&P every year. We may review it and cancel it unilaterally if needed. We are working on this issue,” Erdoğan said on May 22 during his visit to Kazakhstan. He spoke of creating a local rating agency to challenge the dominance of S&P, Moody’s and Fitch in the credit ratings sector.
“We are comfortable with that. There are some small credit rating agencies in countries such as India and Japan,” Coughlin said. “It is very hard to mimic our rating capability,” he added.
Some leading Turkish business associations have supported the prime minister’s idea of establishing a “national” ratings agency.
“Certainly we could have a national credit rating agency. It would be a more effective and influential institution if it rates not only Turkey but the whole world,” Rızanur Meral, the president of the Confederation of Businessmen and Industrialists of Turkey (TUSKON), said, according to Anatolia news agency. He likened ratings agencies to 1970s cars, in which “the radiator warning lamp would light up after the engine had already burnt out.”
“Credit rating agencies issue warnings for countries after a crisis emerges and everything has come out all right,” Meral said, adding that agencies should take on the role of providing early warnings, instead.
Erem Çenesiz, chairman of the Turkish Enterprise and Business Federation (Türkonfed), said given the fact that Turkey’s self-confidence is exceedingly high in accordance with the development the country has achieved, it was very important that this had become a current issue. “It is not very easy [to establish a ratings agency]. There are some criteria, which needless to say should be complied with.”