Fitch downgrades Turkey to 'BB'; outlook negative

Fitch Ratings announced that it downgraded Turkey's note to BB and added that the outlook was 'negative.'

Key highlights from the report (via Reuters)

  •  Downgraded Turkey's long-term foreign-currency issuer default rating (IDR) to 'BB' from 'BB+'.
  • Turkey's economic policy credibility deteriorated in recent months; initial policy actions after elections in June heightened uncertainty.
  • Downside risks to Turkey's macroeconomic stability have intensified due to widening in current account deficit.
  • Downside risks to Turkey's macroeconomic stability have intensified also due to jump in inflation, among others.
  • Tougher financing conditions and a weaker economy will likely hit performance of the banking sector.
  • Sustained reduction of turkey's inflation would need increase in credibility, independence of monetary policy, tolerance of period of weaker economic growth.
  • Composition of ruling coalition suggests progress toward the resolution of the conflict in the south-east is unlikely.
  • Political and geopolitical risks weigh on Turkey's ratings and world bank governance indicators have fallen below 'BB' median.

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