Turkey Upgraded By S&P

S&P upgraded Turkey's long-term foreign currency rating to BB from BB- and a positive outlook which suggests the likelihood of additional rating increase. S&P says this can happen in the next year or two. Our proprietary model is consistent with a BB+ rating. The reduced debt burden and the stability of Turkish banks were behind the S&P decision. Turkey's debt market did not seem to respond to the news, the lira did. The dollar shed its earlier gains against the lira and new sees support near TRY1.5150 and then TRY1.5070. We retain an optimistic outlook for the Turkish lira over the medium term and expect it to be one of the bright spots in the region.