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Moody's places Turkey on review for downgrade after coup attempt

Moody's on July 18 placed on review for downgrade Turkey'sBaa3 long-term issuer and senior unsecured bond ratings and (P)Baa3 seniorunsecured shelf rating.

The rating agency believes that there is a need to assessthe medium-term impact of the failed military coup on Turkey's economic growth, itspolicymaking institutions and its external buffers. According to the agency,the coup, despite its failure, will exacerbate the country's political challenges,elevate its credit risks and further slow its already slower-than-expectedprogress in materially advancing planned economic reforms.

During the review, the agency will assess the probabilityand effects of a sustained slowdown in domestic demand that will lower Turkisheconomic growth for the next two to three years. The agency added that it haslowered its 2016 forecast for growth to 3% as it expects fragile investorconfidence, slowing credit growth and subdued external markets to inhibit thecountry's growth this year.

Moody's will also assess during the review furtherdeterioration of policy predictability and effectiveness and reduced access toexternal liquidity.