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Turkey wins vote of confidence with Fitch investment grade 6 novembre 2012

Posted by Acturca in Economy / Economie, Turkey / Turquie.
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Financial Times (UK) Tuesday, November 6, 2012, p. 21

By Daniel Dombey in Istanbul

Turkey has been raised to investment grade by Fitch, the rating agency, a move that has long been sought by the country’s government and private sector and which comes after nearly two decades of sub-investment ratings.

Fitch’s decision to upgrade the country’s long-term foreign debt to BBB- from BB+ is in effect a vote of confidence in Turkish officials’ efforts to rebalance the economy away from the breakneck growth of recent years and towards a more export-driven rather than domestic-led demand model.

« Fitch believes that the Turkish economy is on track to return to a sustainable growth rate, having narrowed the current account deficit and lowered inflation after overheating in 2011, » the agency said in a statement.

« At some point, an external financing shock and a recession are likely. However, the agency believes that the country’s strong sovereign, bank and household balance sheets, and economic and exchange rate flexibility provide important buffers against shocks spreading into a wider financial crisis. »

Ankara hopes that Fitch’s decision will be followed by the two other big agencies, both of which have Turkey on the verge of investment grade, moves that would allow a wide range of institutions, such as pensions funds, to start investing.

But Moody’s Investors Service said last month that Turkey needed to be more resilient to balance of payments shocks if it were to attain investment grade, while in May, Standard & Poor’s cut its outlook for Turkish sovereign debt from positive to stable – indicating that any upgrade over the succeeding 12 months was unlikely. No rating agency had previously given Turkey investment grade since Moody’s downgraded it in 1994.

Mehmet Simsek, Turkey’s finance minister, welcomed Fitch’s upgrade, saying on Twitter that it was the result of political and macroeconomic stability during the government’s decade in office, following years of crisis.

« The credit rating upgrade to investment grade will support our growth forecasts and will even increase our growth performance, » Mr Simsek said, referring to Ankara’s plans for 5 per cent annual growth by 2014, compared with a level of about 3 per cent today.

Ed Parker, Fitch managing director, said the up-grade reflected the underlying improvement in Turkey’s balance of payments.

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