International Rating Agency Fitch downgraded Turkey’s long-term Issuer default rating (IDR) in foreign currency from “BB” to “BB-.” This is stated in the release on the Agency’s website. The outlook on the rating is negative.
Among the key factors that influenced the rating decision, the experts of Fitch called the dismissal of the head of the Central Bank of Turkey Murat Chetinkaya, the re-election of the mayor in Istanbul as well as deliveries of Russian S-400.
In the latter case, according to the Agency, Turkey continues to be at risk of sanctions. “And while Fitch expects any possible sanctions to be relatively mild with minimal direct economic effect, the impact on sentiment could be significant,” Fitch warns.
The report said that the revision of the sovereign rating of Turkey was scheduled for November 1, 2019. “However, Fitch believes that events in the country require a deviation from the schedule,” the report said.
Among the factors that could lead to a further downgrade are, among others, increased stress in the corporate or banking sectors, which could be caused by a sudden halt in capital inflows or a more serious recession, as well as a serious deterioration in the domestic political or security situation or international relations.
On Friday, Russia delivered the first components of the S-400 to Turkey. The US Senate has already called on Donald Trump to impose sanctions against Ankara for partnership with Russia, which, according to senators, threatens NATO.