Consensus Builds on Prediction of Investment Grade Turkey in 2011

Posted on 12 January 2011

The consensus is building around the prediction that Turkey will be upgraded to investment grade status by the ratings agencies this year.

This week HSBC predicted it in a report. A report which also predicted massive GDP growth in Turkey between now and 2050, as Turkey and emerging markets like it become dominant in terms of growth in the global economy.

HSBC predicts 5.3% growth in Turkish GDP between 2010-2020, 4.7 percent between 2020-2030, 4 percent between 2030-2040 and 3.5 percent 2040-2050. The report also highlighted the massive growth in the Turkish population, which it says means it will continue to have a strong and varied workforce.

HSBC weren’t the only bank to predict an investment grade Turkey in 2011 week. Akbank, the second largest bank in Turkey expanded on the prediction, stating that Turkey could be upgraded to investment grade by Fitch as early as mid-June.

Ziya Akkurt, the bank’s chief executive office said that all three ratings agencies are expected to upgrade Turkey to investment grade this year. He said that Fitch is likely to set the trend, followed by Standard and Poor and Moody’s. This is likely because Fitch has Turkey just one peg below investment grade, while Moody’s and S&P have it two pegs below.

For Turkey investment grade rating will likely increase foreign investment in the country, as well as making it cheaper for Turkish banks and other entities to borrow from the global banks, and via vehicles such as bond issuances, by decreasing the interest rates on such transactions.

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