International rating agency Standard and Poor’s (S&P) downgraded the rating of İş Bank, Vakıf Bank, Yapı Kredi Bank and Garanti Bank on Tuesday following a decision on Jan. 27 that revised its outlook on Turkey from stable to negative.
According to the S&P decision, the credit rating of the four banks was downgraded from BB/stable to BB/negative.
S&P warned on Jan. 27 that it may cut Turkey’s rating deeper into junk territory.
“We are revising our outlook to negative to reflect what we consider to be rising constraints on policy makers’ ability to tame inflationary and currency pressures, which could weaken the financial strength of Turkey’s companies and banks, undermining growth, and fiscal outcomes, during a period of rising global interest rates.”
The Turkish lira started Jan 27 in a negative position as Fitch, the only major credit rating agency that has kept Turkey within investment grade territory, was expected to review its assessment later that day.
The agency has long been keeping its outlook on Turkey negative, meaning the next move would likely be a downgrade. Moody’s cut its sovereign credit rating on Turkey to junk following a similar move by S&P, which rates Turkey two notches below investment grade, in 2016, a tough year during which the lira lost 16 percent of its value.