Turkey Dropped Nine Places in the World Credit League Rankings. According to recent research, Turkey slipped nine places in the World Credit League during 2019 and now ranks 91st. Countries such as Fiji, Bolivia and Armenia have moved ahead of Turkey in the standings. Gradually, Turkey’s credit rating is moving further away from the “investment grade” category. Previous studies show Turkey first regained its “investment grade” status in 2013 after losing it in 1994, but it was unable to hold that status and lost it again in 2016.
Ratings issued in 2019 by the three major global credit rating agencies—Moody’s, S&P and Fitch—show Turkey falling nine spots in the World Credit League. While Turkey was 82nd among 148 countries in 2018, it dropped to 91st in 2019. Factors contributing to the downgrade include the change of the central bank governor, the delay in the economic rebalancing and expected growth, as well as geopolitical and policy developments. Other influences cited are the delivery of Russia’s S-400 air defense systems and the risk of related sanctions, the decision to rerun Istanbul’s municipal elections, and interventions to support the Turkish lira before local elections.
Forty Countries Climbed in the World Credit League
Forty countries moved up in the World Credit League. Recent analysis indicates that credibility has become more important than sheer economic size when comparing countries. A nation’s credit ratings are an effective way to assess risk levels and to make cross-country comparisons. International investors often factor sovereign ratings into portfolio decisions and market selection. A downgrade signals that lenders may face higher risk exposure when lending to that country.
The three major rating agencies—Moody’s, S&P and Fitch—together control roughly 95% of the global rating market and, by the end of 2019, had rated 148 countries. According to the data, 39 countries saw upgrades in their ratings, 20 experienced downgrades, and 89 saw no change. Overall movements in the World Credit League resulted in 40 countries climbing positions, 54 remaining unchanged, and 54 falling.
Fitch Decision Expected on February 21, 2020
Fitch’s action is awaited on February 21, 2020. In July 2019, following the removal of Turkey’s central bank governor, Fitch downgraded Turkey’s rating from BB to BB-. Later, on November 2, 2019, Fitch confirmed the BB- rating and revised the outlook from “negative” to “stable.”
Standard & Poor’s (S&P) issued two assessments in 2019 and assigned a B+ rating while keeping the outlook “stable.”
Moody’s lowered Turkey’s long-term rating from Ba3 to B1 on June 15, 2019, and maintained a “negative” outlook. This timeline leaves three major agencies with scheduled review dates for Turkey: S&P has already reaffirmed its B+ “stable” rating, and Fitch’s decision was expected on February 21, 2020.