Moody's affirms Turkey's Baa3 government credit rating
Moody's affirmation of Turkey's Baa3 government rating reflects the country's economic resilience and strong fiscal metrics, which have been maintained through the long electoral cycle.
In particular, the government's low debt ratio is broadly stable after falling over the past decade, and the debt structure is favourable showing relative resilience to Turkish Lira weakness and forthcoming global interest rate increases.
The key drivers for maintaining the negative outlook are:
The ongoing risks to the country's external financing capacity as a result of its large external funding needs, exacerbated by the fragility of global capital markets and the elevated geopolitical risks that Turkey is facing.
The lack of visibility on whether the government will embark decisively on the economic reforms needed to support growth, promote institutional stability and reduce external vulnerability.
Concurrently, Moody's has affirmed the Baa3 bond rating of Hazine Mustesarligi Varlik Kiralama A.S., a special purpose vehicle wholly owned by the Republic of Turkey. The Baa3 rating carries a negative outlook.
Turkey's local-currency bond and deposit ceilings remain at A3, its long-term foreign-currency bond ceiling remains at Baa1, and its short-term foreign-currency debt ceiling is Prime-2.
The long-term foreign-currency bank deposit ceiling remains Baa3, and the short-term foreign-currency bank deposit ceiling is Prime-3. ■