S&P drops Turkey outlook to negative

S&P said it changed its outlook for Turkey (Turkiye) to negative from stable and affirmed B sovereign foreign- and local-currency credit ratings.

“The negative outlook reflects risks to Turkiye's creditworthiness from what we consider untenable monetary, financial and economic policy settings. In our view, contingent liabilities from state banks and public enterprises are large and growing, while balance-of-payments and exchange-rate vulnerabilities remain elevated,” the agency said in a press release.

“But probably the greatest fiscal and economic risk to Turkiye comes from its large and increasingly pressured banking system, with total assets of 98% of GDP. An estimated 30% of the loan book, and 41% of deposits are denominated in FC. As a consequence, asset quality and financial strength are highly sensitive to exchange rate developments and risk management standards at individual commercial banks, both public and private,” S&P noted.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.