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Will ratings upgrades lower Turkish debt pricing?
25 February 2013
Fitch has promoted Turkey to investment grade, and Moody’s is set to follow. So will Turkey’s vast project pipeline benefit from a debt pricing cut in 2013? By Emma Lindsay.
Turkish project sponsors and lenders have long argued that their costs of borrowing have been artificially high because their country rating does not reflect the real strength of the Turkish economy. Fitch appears to agree, and upgraded the country’s sovereign rating to investment grade in November 2012.
But there is still as little agreement among the ratings agencies about what grade Turkey should be. So while Fitch now has Turkey at BBB-, Moody’s rates Turkey a notch below investment grade, Ba1with a positive outlook. Standard & Poor’s puts Turkey two notches below investment grade, at BB with a stable outlook.
S&P’s cut in Turkey’s outlook from positive so enraged the Turkish government that it stopped paying S&P for a rating. Moody’s, on the other hand, concedes that in 2011 Turkey had debt as a percentage of GDP that was more in line with investment grade countries than its sub-investment peers....
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