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Ratings Companies Consistently Get Turkey Wrong, RBS’s Ash Says

May 03, 2012

Ratings companies are consistently wrong on Turkey and have “mis-rated” the country by three to four levels, Royal Bank of Scotland Plc chief emerging markets economist Tim Ash said.

“It is two to three notches mis-rated by any fair assessment,” Ash said in an e-mailed message to clients today after Turkish Prime Minister Recep Tayyip Erdogan lashed out at Standard & Poor’s today for cutting Turkey’s outlook earlier this week. “It should be investment grade already.”

S&P on May 1 cut the outlook on Turkey’s rating to stable from positive, reducing prospects for an upgrade over the next 12 months. The company rates Turkey BB, the second-highest non- investment grade ranking. Fitch Ratings, which has Turkey at BB+, one step below investment grade, also cut its outlook on Turkey to stable from positive in November, citing Turkey’s current-account deficit.

“The ratings agencies put too much weight on external financing risks” and “do not put enough weight on Turkey’s willingness to pay, as proven by its track record of paying even in times of stress,” Ash said. “I think many in the market would have a lot of sympathy for Erdogan and Turkey.”

Erdogan called S&P’s revision of Turkey’s outlook “strange” and “ideological” in a speech in Istanbul today. “If necessary, we’ll make them pay with a statement that we don’t recognize S&P,” he said, without explaining what that entailed.

To contact the reporter on this story: Benjamin Harvey in Istanbul at

To contact the editor responsible for this story: Gavin Serkin at

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