DBRS downgrades Turkey

DBRS said it downgraded the Republic of Turkey’s long-term foreign-currency issuer rating to BB (high) and long-term local-currency issuer rating to BBB (low).

DBRS also said it downgraded the short-term foreign-currency issuer rating to R-3 and the short-term local-currency issuer rating to R-2 (middle).

The trend is negative.

The one-notch downgrade reflects the deterioration in the rule of law and rising geopolitical tensions, all in the context of Turkey’s large external financing needs, DBRS said.

Reduced external funding poses clear risks to the macroeconomic outlook, the agency added.

The failed coup attempt and its fallout also could divert political attention from the much-needed structural reform agenda, which is important to boost national savings and reduce external imbalances, DBRS added.

The negative trend reflects a view that risks remain skewed to the downside, the agency added.

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