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Bond Market News
Turkey Upgraded to BB- by Fitch
September 9, 2024
Turkey was upgraded to BB- from B+ by Fitch citing multiple positive updates:
- Improved external buffers with overall reserves and net reserves at $149bn and $41bn respectively, thanks to reduced financial dollarization and FX demand, capital inflows and increased access to external borrowing.
- Reduced contingent FX liabilities led by improved depreciation expectations and attractive lira deposit real rates.
- Confidence that the maintenance of a tight monetary policy stance, with the existing tightening having helped with the lira’s real appreciation and also Turkey’s disinflation strategy.
- Lower current account deficits (CAD) after Turkey more than halved it to 1.9% of GDP in 2024. Also, Fitch forecast’s Turkey’s CAD to remain low, averaging 1.7% in 2025-26, below the projected 2.4% BB median.
- Central government deficit is expected to ease slightly to 5% of GDP in 2024 from 5.2% in 2023, outperforming the budgeted 6.4%.
In late July, Turkey was upgraded by two notches, to B1 from B3 by Moody’s. Turkey’s dollar bonds traded stable with its 2029s yielding over 6.2%.
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