Page 53 - TURKRptAUG19

demand. The Turkish government’s currency policy along with the mysterious algorithmic trader at Borsa Istanbul, ‘The Dude’, who appears to make moves that benefit the Erdogan administration, should help this short-term strategy as long as the government does not lose its fragile control on local markets.
8.4 International ratings
8.4.1 International ratings - specific details of rating actions corp/regional etc
TURKEY - Rating agency
Jun-18
Jul-18
Aug-18
Jun-19
Jul-19
Aug-19
Bond rating: Moody’s
Ba2 (UR)
Ba2 (UR)
Ba3 (N)
B1 (N)
B1 (N)
B1 (N)
Bond rating: Fitch
BBB- (S)
BB (N)
BB (N)
BB (N)
BB- (N)
BB- (N)
Bond rating: S&P
BB- (S)
BB- (S)
B+ (S)
B+ (S)
B+ (S)
B+ (S)
Fitch cuts Turkey to BB- in wake of central bank chief firing. Fitch Ratings on July 12 downgraded Turkey’s sovereign rating to BB- after concluding that the dismissal of its central bank governor raises doubts over whether the authorities will show the required tolerance for a period of sustained below- trend growth. Governor Murat Cetinkaya was sacked on July 6 after President Recep Tayyip Erdogan—under political pressure following the humiliating loss of the Istanbul revote at the end of June and last year’s currency crisis that threw Turkey into a recession—accused him of failing to follow instructions on interest rates. Fitch lowered Turkey’s rating from BB with a negative outlook. The sacking of Cetinkaya underlined a deterioration in institutional independence and economic policy coherence and credibility in Turkey, it said. It added that the move “risks damaging already weak domestic confidence (evidenced by rising dollarisation), jeopardising the inflow of foreign capital needed to meet Turkey’s large external financing requirement and worsening economic outcomes”. Growing uncertainties over prospects for structural reforms and the management of the public sector finances in Turkey were also in evidence following the dismissal of Cetinkaya, it said.
Fitch affirms Turkey’s Arcelik two notches above country ceiling amid bank and corporate downgrades. Fitch Ratings has affirmed Turkish consumer goods manufacturer Arcelik's Long-Term Foreign and Local Currency Issuer Default Ratings (IDR) at 'BB+', one notch below investment grade, with a Negative Outlook, the rating agency said on July 18. The affirmation followed the downgrade of Turkey's sovereign Long-Term IDR from 'BB' to 'BB-', three notches below investment grade, and the Country Ceiling to 'BB-' from 'BB+'. The ratings of Arcelik are above the Turkish Country Ceiling, reflecting Fitch's expectations that Arcelik has sufficient structural enhancements that would mitigate transfer and convertibility risks. Nevertheless, the negative outlook reflected Fitch's expectation of prolonged stress on cash generation compared with Arcelik management's expectations, driven by higher financing costs, plus increased inventory and receivable collection days in the domestic market. Significant volatility in the Turkish economy is compounding uncertainty over free cash flow forecasts. However, Fitch expects Arcelik will maintain funds from operations adjusted for receivables net leverage below 2.5x in the medium term, which is more in line with the 'BBB' rating median, two notches above investment level.
Coca Cola Icecek is another Turkish company that has managed to remain above the country ceiling. Fitch said on July 17 in a separate press release that it has downgraded Coca Cola Icecek's Long-Term Foreign-Currency Issuer Default Ratings (IDR) to 'BB' with a Negative outlook. Coca Cola Icecek’s rating 'BB' is one notch above Turkey's country ceiling, reflecting scope for support by The Coca Cola Company (A/Stable). Meanwhile, the rating agency is downgrading Turkish banks and corporates in parallel with the
53 TURKEY Country Report August 2019 www.intellinews.com