Turkey is aiming to establish a national credit rating agency in 2018, the country’s banking watchdog chief said on Monday.
After international credit rating agency Moody’s’s decision to cut Turkey’s rating last week, Turkish markets were busy with the critics.
Turkey’s credit rating was cut further into junk on March 7 with the ratings agency citing an erosion of institutional strength and added risk of external shocks.
Moody’s lowered the rating on the Turkish government’s long-term issuer and senior unsecured debt ratings to two levels below investment grade, taking it to ‘Ba2’ from ‘Ba1’. The rating on the senior unsecured shelf rating was reduced to ‘(P)Ba2’ from ‘(P)Ba1’. The rating outlook was changed to stable from negative.
Speaking to reporters today Mehmet Ali Akben, the head of the Banking Regulation and Supervision Agency (BDDK), said the credit rating agency will most likely be established by Turkish banks.
“The exact date has yet to be set but we want to bring it to fruition sometime this year. We’re aiming for its establishment this year,” he said.
The agency will compile all information needed to establish a working agency within a few years, he said.
He said the agency might reduce banks’ risk weight to zero and will help with their borrowing costs.
“We see that a national rating agency, which will be used by our banks, was a requirement,” he underlined.
The Turkish Industrial Development Bank (TSKB) has created a study group for the creation of such an agency, he added.
Independent rating agencies are used predominately for computation of capital markets’ debt instruments and exports, as well as country risks, he said, adding:
“It is obvious that we had problems in trusting these agencies.”
He highlighted that this would abolish external dependence in the long term.
The agency must be independent, impartial and in compliance with international standards.