Moody’s Recent Two-Notch Upgrade Sparks Optimism for Further Positive Developments in Turkiye’s Financial Standing
Following Moody’s recent upgrade of Turkiye’s credit rating, experts are expecting further improvements. The international credit rating agency Moody’s raised Turkiye’s credit rating by two notches, from “B3” to “B1”, while maintaining a “positive” outlook.
Moody’s statement attributed the upgrade to advancements in governance and a committed return to orthodox monetary policy. Haluk Burumcekci, an analyst at AA Finans, remarked, “Moody’s had fallen significantly behind other rating agencies and needed to close the gap urgently.”
Burumcekci anticipates that subsequent decisions from all rating agencies will likely result in a further notch increase, as they now share a positive outlook on Turkiye.
Timothy Ash, Senior Strategist for Emerging Markets at Bluebay Asset Management, highlighted the rarity of a two-notch upgrade. Ash noted that this decision underscores Moody’s lag behind Standard & Poor’s (S&P) and Fitch Ratings regarding Turkiye’s credit rating, emphasizing the need to catch up. He also pointed out the impact of reforms implemented by Minister of Treasury and Finance Mehmet Simsek.
“The two-notch upgrade and positive outlook suggest more positive changes are on the horizon,” Ash stated.
“Not a Surprise, But a Two-Notch Upgrade Was Unexpected,” Says Aslanoğlu
Professor Dr. Erhan Aslanoğlu, Vice Rector at Istanbul Topkapı University, described the decision as significant and positive. He suggested that the two-notch upgrade reflects a positive outlook for the future, noting that while the upgrade itself wasn’t surprising, the two-notch increase was somewhat unexpected.
Aslanoğlu added, “When comparing Turkiye to other countries with similar ratings, we would expect Turkiye to be in a much better position under normal circumstances. The continuation of this process and strong reforms are essential for moving towards an investment-grade category.”
Ismet Demirkol, Founder of Pariterium Consulting, highlighted the importance of the Central Bank’s adherence to orthodox monetary policy and positive indicators in the fight against inflation. He believes these factors contributed to the two-notch upgrade.
Demirkol predicted that Moody’s decision would reduce Turkiye’s five-year credit default swap (CDS) risk premium and anticipated similar upgrades from S&P and Fitch Ratings. He also noted that this decision could pave the way for increased foreign investment in Turkiye by 2025, potentially leading to sustained foreign direct investment.
In January, Moody’s had already changed Turkiye’s credit rating outlook from “stable” to “positive.” S&P upgraded Turkiye’s credit rating from “B” to “B+” in May, maintaining a “positive” outlook, while Fitch Ratings raised Turkiye’s rating from “B” to “B+” in March and shifted the outlook from “stable” to “positive.”
Source: Trthaber / Prepared by Irem Yildiz