S&P reaffirms Turkey rating, revises outlook up to stable

Ratings agency S&P reaffirmed its foreign currency credit rating of BB for Turkey on Friday, revising its outlook to stable from negative, saying government policy was gradually refocusing on measures to reduce external vulnerabilities. The announcement came on the same day that the lira slid to a record low against the dollar after the arrest of lawmakers from the country's pro-Kurdish opposition party, heightening fears about security and political stability.
S&P cut Turkey's rating to BB from BB+ in July in the wake of an attempted coup and changed the rating outlook to negative, saying the putsch had further fragmented the political landscape. "Although we continue to consider that Turkey's high private sector external debt poses a risk to economic stability, we believe that government policy is gradually refocusing on measures to reduce external vulnerabilities," it said. It added that the stable outlook reflected the balance between the economy's resilience against lingering regional and domestic risks which, if realized, could increase balance-of-payments pressures and widen currently moderate fiscal deficits.