Improvement in Turkey's credit rating

The five-year credit default swap (CDS), which indicates Turkey's ability to repay its debts and is referred to as the risk premium, fell to 276 basis points in today's trading, marking its lowest level since February 2020. 

Turkey's 5-year CDS premium had started the day at 285 basis points.

POSITIVE CHANGES

Analysts emphasized that with the ongoing decline in Turkey's CDS, international credit rating agencies have also made upgrades to Turkey's credit rating and positive changes to its credit rating outlook, stating that this demonstrates the increasing confidence of investors in the Turkish economy.

WHAT DID KARAHAN SAY?

Central Bank of the Republic of Turkey (TCMB) Governor Fatih Karahan, in his presentation of the 'Inflation Report 2024-II' today, said the following regarding Turkey's credit risk premium:

"The current policy mix has ensured an improvement in the risk perception towards Turkey and a decline in the risk premium.

The improvement in Turkey's risk premium slowed down from the beginning of the year. Increased exchange rate volatility and the deterioration in the reserve outlook weakened the risk perception in March.

With the decisions we took in March, our tight monetary policy stance was reinforced, confidence in the policies we implemented increased, and the reserve outlook improved. With these developments, the risk premium has fallen back below the 300 basis point level."