Photographer: Kerem Uzel/Bloomberg
Turkey Cut Deeper Into Junk by S&P on Risk of ‘Hard Landing’By
Turkey’s credit rating was lowered by S&P Global Ratings, which cited a deteriorating inflation outlook and the long-term depreciation and volatility of the nation’s exchange rate.
S&P reduced its foreign-currency rating to BB-/B, on par with Brazil and Vietnam, according to a statement Tuesday. That’s below where it’s rated by Moody’s Investors Service and Fitch Ratings.
"There is a risk of a hard landing for Turkey’s overheating, credit-fueled economy," S&P said in the statement. "This is reflected in the rising imbalances in Turkey’s economy, most notably in its widening debt-financed current-account deficit and high inflation."
S&P said the nation’s "state of emergency" will remain at least until the country’s snap elections, which are expected to allow President Recep Tayyip Erdogan to rule by decree. An escalation of tension in Syria, as well as Turkey’s incursion into Kurdish-controlled areas of Syria, threaten to undermine the nation’s strong export performance.
The Turkish lira has fallen 7.4 percent this year, the third-worst performance among emerging-market currencies. The lira maintained losses today following the downgrade after sliding 1 percent to 4.1017 per dollar. Turkey’s benchmark Borsa Instanbul 100 Index has dropped 9.6 percent so far this year.