Moody's places Turkey’s Baa3 credit rating on review for possible downgrade

Moody’s rating agency on Monday placed Turkey’s Baa3 credit rating on review for a possible downgrade following last week's failed coup attempt. Moody's said that it will look at Turkey’s Baa3 credit rating to “asses the medium-term impact” of the failed coup on the country’s growth and policy-making institutions, putting the rating on review for a downgrade. Moody's is scheduled to review Turkey's rating on August 5.

Fitch Ratings also noted on Monday that there are ‘political risks’ to Turkey’s credit profile but didn’t take any ratings action. Fitch said its next scheduled sovereign rating review on Turkey is due on August 19.

S&P Global Ratings said it would assess the implications of the coup effort during the next few days. In May, S&P revised Turkey’s outlook to stable from negative, citing the resilience of the nation’s economy, while keeping its rating at BB+.

A cut by either ratings firm would take Turkey's average sovereign rating to junk for the first time in three years. Turkey is now facing a similar threat as that of Brazil and Russia last year when their investment-grade status were cut to speculative or “junk” grade, their bonds, stock markets and currencies plunged.