Turkiye’s 5-year credit risk premium (CDS) fell below 282 basis points for the first time since February 2021, falling to 281.75 points.
While the decrease in uncertainties regarding the Turkish economy with the steps taken by the economic management increases the interest in TL assets, these steps are also reciprocated internationally.
While the Central Bank of the Republic of Turkiye (CBRT) has increased the policy interest rate from 8.50% to 50% as part of the fight against inflation since the end of May, the economic management has also demonstrated its determination in the fight against inflation.
Minister of Treasury and Finance Mehmet Simsek stated that the increasing confidence and predictability in the Turkish economy also positively affects the provision of external financing. “While there was a net portfolio outflow of $2.9 billion in the first 5 months of 2023, there was a net portfolio inflow of $16.8 billion in the period June 2023-February 2024.”
Turkiye’s 5-year credit risk premium fell below 282 basis points for the first time since February 2021, falling to 281.75 points.
Analysts emphasized that with the ongoing decline in Turkiye’s CDS, international credit rating agencies also increased Turkiye’s credit rating and made positive changes in the credit rating outlook, and said that this demonstrated the increasing confidence of investors in the Turkish economy.
International credit rating agency S&P increased Turkiye’s credit rating from “B” to “B+” and maintained its credit rating outlook as “positive”. Moody’s, another credit rating agency, also increased Turkiye’s credit rating outlook from “stable” to “positive” in January.
Fitch Ratings raised Turkiye’s credit rating from “B” to “B+” in March and changed its rating outlook from “stable” to “positive”.
Analysts stated that if a sustained decline in inflation, a decrease in the current account deficit, and the formation of a sustainable path can be achieved, credit rating upgrades could continue. They also predicted that Moody’s may raise Turkiye’s rating in its evaluation on July 19th.
Meanwhile, the BIST 100 index at Borsa Istanbul renewed its record by rising by more than 1% to 103,375.74 points.
Source: AA / Prepared by Irem Yildiz