Moody's Investors service on Thursday lifted Turkey's sovereign credit rating to investment grade, citing progress on structural reforms and continued fall in debt burden.
The agency upgraded the country's government bond ratings by one notch from Ba1 to Baa3 with a 'stable' outlook.
Turkey was awarded investment grade status for the first time since the 1994 economic crisis in November, when Fitch Ratings upgraded its ratings to 'BBB-'. Standard & Poor's rates Turkey at BB+, one notch below investment grade.
Turkey was stripped of its investment grade in 1994 by Moody's and S&P and no agency had given it the status since then.
Moody's said yesterday that the first driver underlying its latest move was the improvement in the country's economic and fiscal metrics. "Since the beginning of 2009, Turkey's debt burden has fallen by 10 percentage points to a manageable 36 percent of GDP," Moody's said, adding that it expects this decline to continue in the coming years.
The second driver of the rating action is the progress that the government has made on a wide-ranging institutional reform program that may gradually erode the country's external vulnerabilities, the agency said.
Turkey's central bank on Thursday lowered its policy interest rate for the second time in a row as part of its efforts to prop up the faltering economy and contain the fast appreciation of lira.
The central bank slashed its one-week repo rate by 50 basis points to 4.5 percent, following a similar move at the previous meeting.
For comments and feedback: editorial@rttnews.com