EM CEEMEA CREDIT: Moody's Completes Periodic Review: Ratings of Govt. of Turkiye

" Moody's Ratings announces completion of a periodic review of ratings of Turkiye, Government
London, January 24, 2025 -- Moody's Ratings (Moody's) has completed a periodic review of the ratings of Turkiye and other ratings that are associated with this issuer.

• The Government of Turkiye's credit ratings, including its B1 long-term issuer ratings, are supported by the country's large, diversified and resilient economy, a moderate government debt burden, and improving monetary and macroeconomic policy effectiveness. These strengths are balanced against institutional challenges, external vulnerabilities, and elevated domestic political risks. The return to more orthodox economic policies is credit positive, but sustainably reducing Turkiye's macroeconomic imbalances will take time and is subject to the risk of a policy reversal.
  The significantly tightened monetary policy stance has curbed domestic credit growth and increased confidence in the Turkish lira, setting in motion the economy's rebalancing away from unsustainably buoyant domestic demand, reducing inflationary pressures, shrinking the current account deficit, and prompting foreign capital inflows.
• Consumer price inflation declined to 44.4% in December 2024 from the recent peak of 75.4% in May 2024, even as price growth in some services sectors remains high. We expect disinflation to continue in 2025 with the inflation rate declining to about 30% by the end of the year. Institutions and governance strength is assessed at "b1", balancing the government's track record of moderate fiscal deficits and recent strengthening of monetary and macroeconomic policy effectiveness against the high concentration of power within the presidency, which, in Turkiye's case, undermines operational independence of the other government institutions. The fiscal strength score of "baa1" balances the government's moderate debt burden, which is lower than most rating peers, against the sensitivity of the government's debt metrics to currency depreciation and high inflation, and deteriorating debt affordability.
• The rating could be upgraded if the authorities continue to effectively implement policies that restore macroeconomic stability, reduce inflation on a sustained basis, achieve lasting de-dollarization of the economy, and rebalance growth away from credit-driven domestic demand. Upward pressure on the rating would also increase if the implementation of effective macroeconomic policies was accompanied by reforms that structurally lessen the sovereign's susceptibility to exchange rate and inflation shocks." - Moody's
  TURKEY 5.75% 2047, $75.81, +.45
  TURKEY 5.875% 2030, $104.89, +.13