by: Mehreen Khan,
The blows just keep coming for Turkey.
Fitch has become the latest major rating agency to cut Turkey’s sovereign borrowing status, stripping the country of its last remaining investment grade rating with a major ratings agency. The rating was lowered to BB+ from BBB-.
In a statement late on Friday, Fitch said:
Political and security developments have undermined economic performance and institutional independence. While the political environment may stabilise, significant security challenges are set to remain.
It marks a clean sweep of junkings for Turkey with Fitch following S&P and Moody’s in downgrading the country in the wake of a failed military coup in July.
The downgrade means Turkey’s domestic banks will now face higher funding costs to access central bank loans at a time when growth has fallen to its lowest since 2009 and investors have dumped the currency.
The lira has faced the brunt of worries about persistent security problems, collapsing tourism revenues and unprecedented moves to undermine parliamentary democracy through a landmark major constitutional reform.