Market comment: Turkey

Although the upgrade has been expected for some time due to the Turkish economy’s overall resiliency during the global financial crisis and the strength of its banking sector, Fitch’s overdue upgrade produced a positive surprise as the rating agency increased Turkey’s sovereign rating by two rather than just one notch. Fitch’s upgrade of  Turkey’s long-term foreign currency Issuer Default Rating (IDR) from “BB-“ to “BB+” and long-term local currency IDR from “BB” to “BB+” carried the country just one notch below investment grade of “BBB-“. In the upcoming period, we expect the other rating agencies to come up with similar upgrades. The major rating agencies last upgraded Turkey’s rating in 2005 and maintained their opinions since then.