S&P Outlook Portends Mounting Risk to Fund Flows: Turkey Credit - Bloomberg

S&P Outlook Portends Mounting Risk to Fund Flows: Turkey Credit - Bloomberg:



"Turkey may be one downgrade away from losing access to billions of dollars in bond flows.



Standard & Poor’s reduction of Turkey’s credit outlook to negative last week signals mounting risk that Moody’s Investors Service or Fitch Ratings will return the country to junk. The loss of an investment-grade ranking from either could trigger selling by funds that track bond ratings, according to Cagdas Dogan at BGC Partners Inc. Two-year yields reached a 24-month high in January amid a graft probe that has implicated members of the government.



A loss of foreign investment threatens to increase Turkish borrowing costs and disrupt trade as the nation struggles to service the second-largest current-account deficit among 25 emerging markets, according to the International Monetary Fund. A downgrade might cost Turkey the $22 billion of net inflows that its sovereign bonds attracted in the 12 months prior to it receiving a second investment-grade debt rating in May 2013, said Istanbul-based Dogan, an analyst at BGC."



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