S&P cuts five Turkish financials

S&P said it took the following rating actions on five Turkish financial institutions:

• Lowered the long-term counterparty credit ratings on Turkiye Is Bankasi AS (Isbank), Garanti Finansal Kiralama AS, Yapi ve Kredi Bankasi AS (YapiKredi) and Turkiye Vakiflar Bankasi TAO (VakifBank) to BB from BB+ and affirmed their B short-term counterparty credit ratings;

• Lowered its long-term counterparty credit rating on Turkiye Garanti Bankasi AS to BB from BB+; and

• Lowered its long-term Turkey national scale ratings on Isbank, VakifBank and YapiKredi to trAA- from trAA+. The trA-1 short-term Turkey national scale ratings on these entities were affirmed.

The outlooks on all five financial institutions are negative.

S&P said the actions follow its July 20 downgrade of the Republic of Turkey.

The downgrade reflects the agency’s view that following the attempted coup on July 15, Turkey's political landscape has fragmented further. S&P believes this will undermine Turkey's investment environment, growth and capital inflows into its externally leveraged economy.

In the aftermath of the failed coup, the agency said it believes that the risks to Turkey and Turkish banks' ability to roll over its external debt have increased.

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