Pimco Sees Risk of Turkey Outflows on Possible Downgrade - Bloomberg:
"Pacific Investment Management Co., the world’s biggest bond manager, said Turkey is on the cusp of an investor exodus should credit rating companies downgrade the nation’s debt amid warnings on political risk.
Turkey, which in 2013 moved from junk for the first time in two decades, risks losing its Baa3 debt rating with Moody’s Investors Service, which has a negative outlook on it. Two-year note yields have surged by 111 basis points to 9.36 percent over the past month, the second-biggest leap after Ukraine, according to data compiled by Bloomberg.
“Turkey is particularly exposed to global turbulence as it has a substantial current account deficit, and continues to run unorthodox monetary policy,” Michael Gomez, head of emerging markets portfolio management at Newport beach-based Pimco, said in an e-mail. “Following the upgrades to investment grade, substantial funds flowed into Turkey, and there is a risk that these could revert if they are downgraded to sub-investment grade.”"
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