Posted on 14 February 2011
Moodys upgrades Turkeys rating on economic resilience
Turkeys government bond rating was raised one notch to Ba2 at Moodys Investors Service, which cited growing confidence in the governments financial shock-absorption capacity.
The ability of the government and the country more generally to regroup when faced with a very significant economic and financial challenge indicates that Turkey has reached a higher level of resiliency which is what our ratings ultimately reflect, Sarah Carlson, an analyst at Moodys in London, said in an e-mailed report Friday.
Turkish banks endured the global economic crisis without financial aid from the government, unlike the bailout of lenders and tougher industry regulations prompted by the countrys recession in 2001. Slowing inflation enabled the Central Bank to lower the benchmark borrowing rate by 10.25 percentage points, the biggest reduction among the Group of 20 largest economies, helping to ease the downturn.
The markets had been focusing on rumours of an upgrade by S&P, but then Moodys snook up on the rails, Timothy Ash, chief economist for eastern Europe, the Middle East and Africa at Royal Bank of Scotland, said in a note to investors. A bit disappointing that Moodys only moved Turkey one notch. Answers on a postcard why Turkey should be rated behind Egypt.
The Moodys upgrade is a testament to the success of the policies weve implemented and the performance of our economy, Deputy Prime Minister Ali Babacan said, according to state-run Anatolia news agency. Its important as an indicator that ratings agencies are starting to close the gap between their opinions and the markets.
Turkey may be rated investment grade in a longer term horizon, said Mark Mobius, executive chairman at Templeton Asset Management. The Moodys upgrade was not unexpected,. Investment grade status would be helped on by lower interest rates and slower inflation, he said. Turkeys economy and the countrys banks are doing quite well, he said.
Fridays rating change by Moodys came three days after Turkeys Treasury sold $2 billion of 30-year bonds to yield 6.85 percent. The sale was more than three times over-subscribed.
I was expecting them to be more bullish, especially after what Fitch did, said Yarkin Cebeci, an economist at JPMorgan Chase, in Istanbul. It wont have a huge impact on prices because as far as the market is concerned Turkey is already classed as investment grade.
8 January 2010 (Quoted from Hurriyet Daily News) Abridged