Moody’s Does Not Consider Rating Downgrade

Kristin Lindow,Moody’scredit analyst, said that Turkey’s ratings reflect recent developments and she did not expect a downgrade in the ratings. Lindow commented that the economy was well-balanced and the country recorded a significant progress in the last few years. She also noted that the recent volatility in financial markets stemmed from both domestic and external factors. According to Lindow, the aggressive move of the central bank that increased key interest rates by 1.75 percentage points dispersed concerns over the independence of the bank. However the deprecation of local currency can continue in the coming period and it may weaken to 1.80 against the U.S. dollar, she also commented. Regarding macroeconomic indicators, Lindow said that they expected the current account deficit/GNP ratio to be 5.8-6% against the previous forecast of 7%. The economic growth would be 5% or slightly higher, she added.

In early May, Lindow said that the rating agency is watching the current account balance closely for a possible outlook change. She then commented that Moody’s would not change Turkey’s rating in the short-term, since it should change stable outlook first. Moody’s upgraded Turkey’s country ceiling for foreign currency debt to Ba3 with a stable outlook, from B1 in Dec 2005. On a related note,Standard and Poor’srecently confirmed Turkey’s BB- rating with a positive outlook whileFitchalso assigns Turkey “BB-“rating with positive outlook.