Fitch rates Turkey eurobond BB-

Fitch Ratings said it assigned the Republic of Turkey's forthcoming $1 billion eurobond due on July 14, 2017 a BB- rating. The Turkish Treasury reported the pricing of the bond today.

The eurobond has a coupon of 7.5% and a spread over U.S. Treasury bonds of 501 basis points.

The rating is in line with Turkey's long-term foreign-currency issuer default rating, which has a stable outlook.

"Turkey's sovereign eurobond issue highlights its continued international capital market access in challenging global financial conditions and its relative resilience, so far, to the credit crunch," Edward Parker, head of emerging Europe at Fitch, said in a statement. "Nevertheless, Turkey faces a challenging near-term outlook and Fitch believes the timely agreement of a new [International Monetary Fund] loan program will be important to reduce fiscal and external financing risks."

Concerns are partly mitigated by Turkey's strong banking sector, which is moderate in size, well-capitalized, has a close to balanced net external debtor position, has no significant open foreign-currency position and a low loan-to-deposit ratio of only 80%, the agency noted.

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