Moody's cut Turkey's sovereign debt rating by one notch to the speculative level of "Ba1" Friday, saying the country's finances have weakened amid increased political turmoil after the July 15 coup attempt.
"Turkey continues to operate in a fragile financial and geopolitical environment," Moody's said. "Its external vulnerability has risen, both over the past two years and more recently as a result of unpredictable political developments and volatile investor perception."
The shock to Turkey's economy following the July 15 failed coup attempt has largely dissipated, international ratings agency Moody's had said previously on Wednesday.
"Turkey's problems remain longer-term however," Alastair Wilson, Moody's managing director of Global Sovereign Risk, said, pointing to the country's policymaking drives and the economy's sensitivities to global interest rate shifts.
Moody's put Turkey's credit rating on review for a possible downgrade to junk status on July 18.
Both Fitch and Moody's rate Turkey at the lowest investment grade. This allows its bonds to be bought by conservative funds that require a country to be classed investment grade by at least two of the major agencies.
Turkey's government has said the defeated coup, which left over 240 people killed and nearly 2,200 injured, was organized by followers of Fetullah Gülen, who has lived in self-imposed exile in the U.S. state of Pennsylvania since 1999, and his FETÖ network.
Gülen is also accused of a long-running campaign to overthrow the state through the infiltration of Turkish institutions, particularly the military, police and judiciary, forming what is commonly known as "the parallel state".
