Turkey’s sovereign debt rating may be raised by Moody’s Investors Service if the government shows determination to curb spending.

“The rating could be upgraded should the government put in place realistic plans to rein in the fiscal stimulus of the past few years,” Moody’s analyst Kristin Lindow said in an e-mailed report Friday.

Prime Minister Recep Tayyip Erdoğan met ministers last week to discuss tightening budget targets, after the country ran up a deficit of 23.2 billion Turkish Liras ($15.5 billion) in the first half compared with a surplus a year earlier. The International Monetary Fund has requested spending cuts as the two sides discuss a new loan agreement.

Istanbul Stock Exchange’s benchmark IMKB-100 index extended gains after the Moody’s statement, closing Friday at … Bond yields fell 4 basis points to 9.37 percent, according to an index of securities tracked by ABN Amro Holding.

Moody’s rates Turkey’s debt at Ba3, or three steps below investment grade.

Moody’s also lowered Turkey’s “susceptibility to event risk” to “moderate” from “high” after the government “endured volatile capital inflows and ongoing infighting between the society’s secular and religious elements,” Lindow said.

The country’s sovereign rating may be downgraded “should either economic or political disarray meaningfully and durably worsen the government’s debt metrics,” she said.

Sat, 12 Sep 2009 09:47:00 .turkeydailynews.com