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Following S&P’s first rating upgrade on Turkiye in 11 years, Turkiye’s rating is now four notches below investment grade according to S&P and Fitch, while it is still six notches below investment grade according to Moody’s. The outlook is positive according to all of the big three rating agencies, indicating a high likelihood of more upgrades going forward, most likely starting with Moody’s. Regarding the TRY, a policy of real appreciation is in action and we see no reason for this policy to change. TURKGB’s may also benefit from the positive mood and expectations regarding further upgrades, but it is still a market dominated by local institutions, trading according to funding levels and inflation expectations. An interesting aspect of these economic policies and the rate outlook is the impact on the corporate bond market in Turkiye. Similarly, both the Turkish government and the private sector are likely to step up their efforts to borrow from abroad. |