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Türkiye Upgraded to Ba3 by Moody’s While Fitch Affirms Rating at BB-
July 28, 2025
Türkiye has been upgraded to Ba3 from B1 by Moody’s. This comes on the back of the Central Bank’s commitment to tackling inflation, restoring macro stability and supporting Lira confidence. Türkiye’s central bank has taken a tight monetary policy stance, especially after pressure on the Lira following domestic political unrest and US tariff announcements in early 2025. This has resulted in inflation dropping to 35% YoY in June 2025 from 72% in June 2024, and Moody’s expects it to fall further to 20% by end-2026. The central bank’s monetary policy adjustment since 2023 has supported rebalancing of Türkiye’s economy away from growth driven by domestic demand and excessive credit. Türkiye’s current account deficit narrowed sharply to 0.9% of GDP in 1Q2025 vs 5.4% of GDP in 1Q2023. However, household consumer growth has slowed to 2% YoY in 1Q2025 vs 14% in 2023.
External risks persist despite recent macroeconomic gains, as a sharp capital outflow in early-2025 has drained most of the central bank reserves (net of swaps). It stands at about 30% of total outstanding short-term debt, vs. 70-100% before 2018. On the other hand, Fitch has affirmed Türkiye at BB- with a stable outlook, citing low external liquidity and weaker governance compared with peers.
Türkiye’s 9.875% 2028s are trading stable at 109.38, yielding 5.74%.
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