After Fitch Ratings upgraded Turkey to investment grade in November 2012, Turkey earned its second and third investment-grade credit ratings in May with an upgrade to BAA3 and BBB by Moody’s Investors Service and Japan Credit Rating Agency (JCR) respectively. Currently, the country secured three investment-grade credit ratings, and it is expected that this will be further strengthened by possible upgrading by Standard & Poor’s.
While Moody’s announced that Turkey’s improving economy and public finances warranted the upgrade, JCR announced “Turkey has successfully weathered challenges of highly adverse international economic environment from the Lehman Shock through the European sovereign debt crisis. Increased net export and lowered unemployment rate in 2012 suggest strength of its growth potential, despite dropped GDP growth rate itself. The level of national income has always been far greater than those of Asian emerging economies”
With the Moody’s upgrade, Turkey has joined a diverse range of economies at the bottom of the investment-grade pool, including Azerbaijan, Uruguay, Hungary and Spain.
The credit rating upgrades are expected to boost an already robust local real estate industry, particularly in regards to foreign investment. Upgrades will encourage more businesses to expand and relocate to Turkey. This will have a domino effect in the market. As more international businesses open new offices in Turkey, it also will bring in more foreign employees.
It has been seen that international investors are quite active in the Turkish market, willing to benefit from the significant young population, proximity to untapped markets and positive economic prospects. It is expected that these upgrades will help the enlargement of the international investor-pool.