Fitch cuts Turkey's Credit Rating deeper into Junk Territory

[ARMalik]

Fitch cuts Turkey's credit rating deeper into junk territory

Ratings agency Fitch on Friday downgraded Turkey's sovereign debt rating to "B+" from "BB-" saying the government's policies have increased risks from high inflation and weak foreign currency liquidity.

www.reuters.com

Fitch cuts Turkey's credit rating deeper into junk territory​

Feb 11 (Reuters) - Ratings agency Fitch on Friday downgraded Turkey's sovereign debt rating to "B+" from "BB-" saying the government's policies have increased risks from high inflation and weak foreign currency liquidity.

An unorthodox economic policy driven by President Tayyip Erdogan has seen the country slash interest rates despite soaring inflation, hammering the lira and sending consumer prices to a two-decade high. read more

‍"Policy-driven financial stress episodes of higher frequency and intensity have increased Turkey's vulnerabilities in terms of high inflation, low external liquidity and weak policy credibility", Fitch said in a statement.

The ratings agency maintained the middle-eastern nation's outlook at "negative".

@Beast

 

[vi-va]

Turkey borrowed a lot in past decades. That's why its currency is unstable.

 

[xbat]

Turkey is not being governing by now, thats why

 

[Indos]

Turkey borrowed a lot in past decades. That's why its currency is unstable.

Wrong, actually Turkey debt to GDP ratio is quite small, around 30 %

 

[Tshering22]

Rating agencies can also have a strong bias. While the Turkish economy is suffering indeed, there is a big window of opportunity if Erdogan actually listened to his economists and Central Bank governors. His war with his own scholars is not going in the right direction and political ego is affecting the common people. I am not an economist, but making borrowing cheaper at a time when inflation is shooting isn't a wise idea.

Unlike Lebanon or Syria, the one thing that Turkey has is a very strong economic foundation that is based on producing goods relative to its region, competitive pricing, a strong sense of self-confidence and identity in people & an industrious mindset to excel. These 4 things when managed well, can bring any nation from the edge of abyss to prosperity.

There is still considerable time for RTE to reverse his mis-calculations.

 

[Indos]

Turkey is not being governing by now, thats why

I think this is the weakness of Presidential system, it is hard to impeach President base on policy he takes, Impeachment can only happen if President break the law.

 

[Luosifen]

Ratings agencies are not impartial, they give better ratings to clients that spend big money with them as witnessed with bond issuers leading up to subprime mortgage crisis of 2008. US economy in bad shape right now, they need money to flow their way and causing capital flight from Europe and other smaller markets is one way of doing it.

 

[Shotgunner51]

The ratings agency maintained the middle-eastern nation's outlook at "negative".

Turkey is a European country, they are in the process of joining EU. I guess if the news is "positive", western media will label them European.

Türkiye

In 1987, Türkiye applied to join what was then the European Economic Community, and in 1999 it was declared eligible to join the EU...

ec.europa.eu

 

[Pakistan Space Agency]

Wrong, actually Turkey debt to GDP ratio is quite small, around 30 %

In 2020, the ratio had increased to 39.5%.

Turkiye's Nominal GDP 2021: $796 billion
Total External Debt (June 2021): $448 billion

By the end 2021, it was expected to touch 47% by Fitch Ratings.

We forecast general government debt to increase significantly to 47% of GDP in 2021, driven mostly by the lira depreciation, up from our August forecast of 39% but still below the forecast 58% of GDP 'BB' median.​

 

[merzifonlu]

Turkey is a European country, they are in the process of joining EU. I guess if the news is "positive", western media will label them European.

Türkiye

In 1987, Türkiye applied to join what was then the European Economic Community, and in 1999 it was declared eligible to join the EU...

ec.europa.eu

Wrong! Those talks have long since collapsed.

Europeans have never considered Turkey a European state. In fact, they are right, Turkey has never been European. That's why Western media never make "positive" news about Turkey, just like Russia and China.

Turkey's NATO membership is now almost on paper. I expect Turkey-Western relations to get worse as time goes on, I think it will never get better.

 

[Ali_Baba]

I though the GBP-PKR exchange rate was bad for PKR but i have just seen the drop in GBP LIRA rate - 4 x drop in 5 years...

I am going to Turkey in May this year - so it works in my favour i reckon!

 

[Indos]

India credit rating is also near junk territory according to Fitch Rating

 

[Shotgunner51]

India credit rating is also near junk territory according to Fitch Rating

Unbelievable!

 

[Indos]

In 2020, the ratio had increased to 39.5%.

View attachment 816592

Turkiye's Nominal GDP 2021: $796 billion
Total External Debt (June 2021): $448 billion

By the end 2021, it was expected to touch 47% by Fitch Ratings.

We forecast general government debt to increase significantly to 47% of GDP in 2021, driven mostly by the lira depreciation, up from our August forecast of 39% but still below the forecast 58% of GDP 'BB' median.​

Yup, for 2020, almost all countries increase their debt to mitigate the economic impact of Covid 19 pandemic and to keep some poor segment afloat during lock down measure

 

[vi-va]

Wrong, actually Turkey debt to GDP ratio is quite small, around 30 %

I am not saying debt.

Borrow means foreign holders hold a lot of liability of Turkey.

Turkey has huge goods trade deficit in past decades, highly dependent on remittance of oversea Turks, and tourism.

Turkey currency is unstable in past decades, very high inflation, domestic and foreign investors always keep $ or € instead of Lira. It worsens Lira currency.

Turkey as a nation has double deficit, trade deficit and fiscal deficit. Erdogan just postponed when market is good, but liability is liability. Covid-19 exploded the long waited bomb.