Moody's Downgrades Turkey's Ratings to B3, Outlook Raised to Stable
August 12 2022 - 4:47PM
Dow Jones News
By Stephen Nakrosis
Moody's Investors Service on Friday said it was lowering the
Government of Turkey's long-term foreign- and domestic-currency
issuer and the foreign-currency senior unsecured ratings to B3 from
B2.
Moody's cited rising pressures on the country's balance of
payments and the fact that "authorities are having to resort to
increasingly unorthodox measures in an attempt to stabilize the
currency and restore foreign-currency buffers."
According to Moody's, the country's external position is "under
greater-than-expected pressure, mainly as a result of surging
energy prices, which are pushing up already high inflation and
raising external financing needs." Declines in foreign-currency
reserves are a further pressure point, Moody's said. The agency
also cited inflation, which rose to 79.6% in July, and is now among
the highest levels reported globally. The Turkish lira has lost
around 30% of its value against the U.S. dollar this year, the
agency said.
Moody's also said it was raising its outlook of Turkey to
stable, reflecting its view that the risks at the B3 level are
balanced. Moody's also said that "while the authorities' highly
unorthodox economic policies will likely exacerbate the current
economic imbalances, the sovereign has relatively low external debt
and moderate refinancing needs for the remainder of the year and
next year."
The agency said it forecasts real GDP growth of 4.5% in 2022 and
2% in 2023, and added, "the risk of a sharper slowdown is
material."
Write to Stephen Nakrosis at stephen.nakrosis@wsj.com
(END) Dow Jones Newswires
August 12, 2022 17:32 ET (21:32 GMT)
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