Moody’s on Friday upgraded Türkiye’s ratings, citing a strengthening track record of effective policymaking, easing of inflationary pressures and drop in economic imbalances, while changing the outlook to stable from positive.
The sovereign credit rating was raised from "B1" to "Ba3."
Moody’s said the upgrade reflects the strengthening track record of effective policymaking, more specifically in the central bank's adherence to monetary policy that durably eases inflationary pressures, reduces economic imbalances, and gradually restores local depositor and foreign investor confidence in the Turkish lira.
The upgrade also reflects the view that the risk of a policy reversal has receded, although it will remain present in the coming years, it said.
The reason for the stable outlook was that it balances upside and downside risks to Türkiye’s credit profile.
“On the upside, extending the track record of effective policymaking without political interference has the potential to support the improvement in Türkiye's external position more substantially than we currently assume,” Moody’s said.
“Furthermore, the government's ongoing and planned structural reforms could improve Türkiye's resilience to external shocks by further reducing its energy import dependence and increasing the competitiveness of exports,” it added.
In July 2024, Moody’s upped Türkiye’s credit ratings by two notches from “B3” to “B1” and changed its outlook to positive, marking its first upgrade for Türkiye in more than a decade.
The credit rating firm's calendar for this year set the first credit rating review date for Türkiye as Jan. 24, but Moody's had not made a decision regarding Türkiye's credit rating at that time.
