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<\/p>\nTurkey\u2019s credit rating was raised to a level below investment grade by Moody\u2019s Investors Service, which cited \u201csignificant\u201d improvement in public finances and policies to cut the current-account deficit. Lira bonds rallied.<\/p>\n
<\/p>\n
Turkey\u2019s debt was upgraded one step to Ba1, according to an e-mailed statement. Moody\u2019s kept its positive outlook on expectations \u201cthe drivers that led to today\u2019s rating upgrade will continue to improve the country\u2019s fiscal and macroeconomic resilience.\u201d<\/p>\n
\u201cAn upgrade to an investment-grade rating will probably be dependent on Turkey becoming more resilient to balance-of- payment shocks, given the already favorable public-finance metrics,\u201d Moody\u2019s said.<\/p>\n
Prime Minister Recep Tayyip Erdogan\u2019s government cut the budget deficit to 1.3 percent of gross domestic product last year from 3.6 percent in 2010 and state debt to 39 percent from 42 percent, according to Treasury data. Central Bank governor Erdem Basci began setting benchmark borrowing costs daily in October to slow inflation and cut the world\u2019s second highest current-account deficit after the economy grew 8.5 percent last year.<\/p>\n
Turkey\u2019s inflation rate slowed to a seven-month low of 8.3 percent in May while the current account gap narrowed for six straight months from the previous year to $5 billion in April. The government targets a budget deficit of 1.5 percent and state debt ratio of 37 percent of GDP this year.<\/p>\n
Debt Outlook<\/p>\n
Fitch Ratings ranks Turkey at BB+, one step below investment grade with a stable outlook. Standard & Poor\u2019s cut the outlook on Turkey\u2019s debt to stable from positive on May 1, maintaining its BB rating, two steps below investment grade.<\/p>\n
\u201cMoody\u2019s foreign-currency issuer rating for Turkey is now the best out of the three agencies given the positive outlook,\u201d Societe Generale SA (GLE) said in an e-mailed report by strategists Esther Law and Benoit Anne in London. \u201cWe expect the resilience of long-end local debt to continue, boosted by the upgrade.\u201d<\/p>\n
Yields on benchmark two-year lira bonds fell 8 basis points to 9.01 percent at 5:54 p.m. in Istanbul, the lowest level since February. The lira climbed 0.4 percent to 1.7941 against the dollar, gaining for a seventh day to the highest level since May 11. The main ISE National 100 (XU100) stocks index rose 0.2 percent to 59,401.26, the highest level since April 30.<\/p>\n
Turkey\u2019s general government debt level of 39.4 percent in 2011 was much lower than the Ba1 median of 54.6 percent and more in line with the Baa3 median of 38.5 percent, according to Moody\u2019s.<\/p>\n
\u2018Root Cause\u2019<\/p>\n
Government incentives to boost investment and private pensions seek to address \u201cthe root causes of the country\u2019s external vulnerabilities, such as the high import content of its exports, the low savings rate and its modest level of foreign- exchange reserves,\u201d Moody\u2019s said. The policies will also increase foreign direct investment inflows, it said.<\/p>\n
The country\u2019s diversification of exports is \u201can important strength\u201d which will help to buffer the economy should market stress from the euro region intensify further, Moody\u2019s said.<\/p>\n
Moody\u2019s would consider upgrading Turkey if the government made further progress in lowering its external vulnerabilities by reducing its current account deficit, increasing foreign- exchange reserves, or cutting the private sector\u2019s external borrowing, it said.<\/p>\n
The positive outlook on Turkey\u2019s rating \u201cwould likely be moved to stable\u201d if progress on addressing external vulnerabilities were to be reversed, according to the report. Any material deterioration in public finances would prompt a downward movement in the outlook, Moody\u2019s said.<\/p>\n
\u201cAlthough not likely given the country\u2019s improved resilience, Moody\u2019s believes that a sudden and sustained stop in foreign capital flows would exert downward pressure on the ratings,\u201d the rating company said in its report.<\/p>\n
via Turkey Upgraded to Level Below Investment Grade by Moody\u2019s – Businessweek.<\/p>\n","protected":false},"excerpt":{"rendered":"
Turkey\u2019s credit rating was raised to a level below investment grade by Moody\u2019s Investors Service, which cited \u201csignificant\u201d improvement in public finances and policies to cut the current-account deficit. Lira bonds rallied. Turkey\u2019s debt was upgraded one step to Ba1, according to an e-mailed statement. Moody\u2019s kept its positive outlook on expectations \u201cthe drivers that […]<\/p>\n","protected":false},"author":83,"featured_media":54363,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[846],"tags":[6515],"class_list":["post-54361","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-moodys"],"_links":{"self":[{"href":"https:\/\/www.turkishnews.com\/en\/content\/wp-json\/wp\/v2\/posts\/54361","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.turkishnews.com\/en\/content\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.turkishnews.com\/en\/content\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.turkishnews.com\/en\/content\/wp-json\/wp\/v2\/users\/83"}],"replies":[{"embeddable":true,"href":"https:\/\/www.turkishnews.com\/en\/content\/wp-json\/wp\/v2\/comments?post=54361"}],"version-history":[{"count":0,"href":"https:\/\/www.turkishnews.com\/en\/content\/wp-json\/wp\/v2\/posts\/54361\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.turkishnews.com\/en\/content\/wp-json\/wp\/v2\/media\/54363"}],"wp:attachment":[{"href":"https:\/\/www.turkishnews.com\/en\/content\/wp-json\/wp\/v2\/media?parent=54361"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.turkishnews.com\/en\/content\/wp-json\/wp\/v2\/categories?post=54361"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.turkishnews.com\/en\/content\/wp-json\/wp\/v2\/tags?post=54361"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}