Fitch Ratings upgrade Turkey to investment grade

  Date posted: 6th of November 2012

A well declining government debt, low near-term economy risks, a good banking system, good medium-term growth prospects, and a wealthy economy. These were just some of the reasons mentioned by Fitch Ratings who today upgraded the Turkish economy rating to investment grade. 

A statement from Fitch Ratings read: “The upgrade to investment grade reflects a combination of an easing in near-term macro-financial risks as the economy heads for a soft landing.”

The statement went on: “Fitch believes that the Turkish economy is on track to return to a sustainable growth rate, having narrowed the current account deficit and lowered inflation.”

Fitch upgraded Turkey’s long-term foreign currency Issuer Default Rating (IDR) to BBB- from BB+ and upgraded the long-term local currency IDR rating to BBB from BB+.

The upgrading of Turkey’s Fitch Rating has long been awaited by Turkish Prime Minister Recep Tayyip Erdogan, and is the first time since 1994 that Turkey has been rated as investment grade as Fitch Ratings place their trust in the Turkish economic future. It is widely expected that within the next 12 months, other ratings agencies Moody's and S&P will follow suit in raising Turkey's rating. 

The upgrade instantly saw an uplift in Turkish financial markets as shares jumped 2 percent to a record high and the Turkish Lira performing well against the Dollar. Turkish Deputy Prime Minister Ali Babacan said: "Turkey's achievement of this credit rating is expected to mark the start of a new era in the access of our public and private sector institutions to international private markets." 

Turkey has come on leaps and bounds in the last few years as the Turkish economy strengthened to become one of the strongest in the region; last year Turkey had the second fastest growing economy in the world only to China, and is one of the rare flourishing countries in a world crippled by the financial meltdown. This has a direct impact on the investment in to Turkey as foreign investors look to the stable Turkish markets rather than the unstable markets in Europe.