Turkey’s Credit Rating Upgraded by S&P, Following Fitch

(Bloomberg) -- Turkey’s credit rating was upgraded by S&P Global Ratings, aided by the government’s return to more orthodox policies.

S&P Global has moved Turkey’s long-term sovereign rating one notch higher to B from B, with a positive outlook, according to a statement on Friday. 

“Following local elections in Turkiye, we believe the coordination between monetary, fiscal, and incomes policy is set to improve, amid external rebalancing,” S&P Global said.

“Policymakers are set to persevere with efforts to reduce elevated inflation through a combination of monetary and credit tightening, less generous wage settlements, and gradual fiscal consolidation,” the ratings agency added.

S&P Global Ratings raised the country’s rating outlook to positive in November in a move to laud Turkey’s shift to a more orthodox economic policy and the central bank’s steep rate hikes to rein in inflation. Since the revision in the outlook, Turkey’s central bank has raised its policy rate by a further 1,000 basis points to 50% from 40% and has promised to do “whatever it takes” to curb inflation, which climbed to 69.8% year-on-year in April. 

Fitch Ratings upgraded Turkey’s credit rating this year to B while Moody’s raised its outlook to positive at the same time as affirming its B3 ranking. Although the assessments are positive, the country’s rating still remains several notches below investment grade. Nevertheless, Turkey’s Treasury and Finance Minister Mehmet Simsek cited his expectation for credit upgrades to continue in March, following Fitch’s move. 

--With assistance from Allegra Fradkin.

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