Ratings agency Moody's downgraded its assessment of Turkey's ability to pay back its debts further into junk territory, citing concerns over monetary policy, reform delays and institutional strength. Moody's said in a statement late Wednesday it was cutting Turkey's sovereign ratings to 'Ba2' from 'Ba1', with a stable outlook.
According to Moody's, Ba grade ratings are are judged to be speculative and are subject to substantial credit risk. The bonds issued under such ratings are thus judged by investors to be "junk". Turkey has been seen terror attacks, a failed coup and an unprecedented crackdown since 2016 and Moody's said the country's institutions were "faltering" as a consequence.
"Faltering institutional strength is reflected in a broad range of adverse outcomes on the economic, financial and political front, despite strong near-term growth rates and healthy public finances," Moody's said. It said the crackdown after the failed coup had resulted in an "undermining of the authority of the judiciary".
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