Turkey hails investment rating
Istanbul, May 18, 2013
Turkey hailed its second investment grade rating yesterday, seeing it as a seal of approval from international markets for a decade of economic reform.
Investors joined in, driving sovereign bond yields to record lows.
Government enthusiasm was tempered, however, by some concern that the move, coinciding with a visit by Prime Minister Tayyip Erdogan to Washington, might trigger over-large capital inflows into the lira.
Moody's assigning a Baa3 rating with a stable outlook to Turkey late on Thursday, making it eligible for inclusion in a number of investment-grade only bond indices and adding to the economy's switch from an emerging market to a developed one.
Fitch Ratings lifted Turkey to investment grade in November, while Standard & Poor's rates Turkey one notch below.
Since his conservative, pro-market AK Party first came to power in 2002, Erdogan has transformed a crisis-prone economy with chronic inflation into Europe's fastest growing country, tripling per capita income, in stark contrast with neighbouring Greece, which Moody's rates 11 notches lower.
"Turkey long deserved this rating, or an even higher one, both economically and politically. I see this as a delayed recognition of what we deserved," Economy Minister Zafer Caglayan said.
"We now expect much greater investments, both in terms of direct and portfolio investments. The central bank needs to be ready for the pressures this will exert on the lira," he said.
Moody's said Thursday's one-notch upgrade was based on structural improvements in the economy and in public finances that will better insulate Turkey from external shocks.-Reuters