Baku. 20 August. REPORT.AZ Turkey kept its investment grade credit ranking at Fitch Ratings, while the outlook was cut to negative from stable, as a failed coup attempt last month increased the political risks in the country.
Report informs, Fitch agency rates Turkey BBB-, the lowest investment grade. It said the outlook is dimmed as growth may slow amid the political turmoil. The rating is in line with Moody’s Investors Service, which has placed it on review for a possible downgrade while it assesses the impact of the military takeover attempt. S&P Global Ratings lowered Turkey one level to BB, two steps below investment grade, on July 20.
“The implications for checks and balances, which in Fitch’s opinion have eroded in recent years, are unclear, as is the potential for further disruption from those behind the coup attempt,” Fitch said in a statement. “Political uncertainty is expected to impact economic performance and poses risks to economic policy.”
Fitch pointed out that while the country faces large funding needs, capital flows have been “resilient” with only a marginal increase in borrowing costs since the attempted coup. The rating company does not expect the fiscal balance to weaken following the turmoil.
The decision by Fitch is important because some large pension funds and insurance companies have policies preventing them from investing in countries with fewer than two investment grades from the three major rating companies.
The third rating Agency Moody’s on 18 July, has placed the rating of Turkey for reconsideration. On 6 August it announced that it would continue the review and plans to complete the review within 90 days from 18 July.
Notably, in the evening on July 15, a coup attempted in Turkey. More than 240 people were killed. After that, large-scale "cleansing" operations were carried out in government agencies: More than 81 people were laid off, about 26 thousand people were detained.