Turkey had its debt rating cut deeper into junk by Moody’s Investors Service, which warned of a possible balance-of-payments crisis in assigning the lowest grade it’s ever given to the country.
The sovereign credit rating was cut to B2, five levels below investment grade and on par with Egypt, Jamaica and Rwanda. The company kept a negative outlook on the rating, saying fiscal metrics could deteriorate faster than currently expected.
“Turkey’s external vulnerabilities are increasingly likely to crystallize in a balance-of-payments crisis,” London-based Moody’s analysts Sarah Carlson and Yves Lemay said in a report Friday.
Moody’s, which last downgraded Turkey more than a year ago, now ranks it one level lower than S&P Global Ratings and two notches below Fitch Ratings. Turkey held an investment-grade score from two of the three major credit assessors prior to the July 2016 coup attempt against President Recep Tayyip Erdogan.
Turkey’s standing with investors has suffered as Erdogan pursued an approach that prioritized growth above all else. The reliance on credit stimulus has exposed the vulnerabilities of the $750 billion economy and came at the expense of inflation and currency instability.
Read more: Bloomberg