Moody's Investors Service

Turkish President Recep Tayyip Erdoğan has lashed out at rating agencies, after Moody's downgraded the country's sovereign debt rating to "junk" status.

Moody's downgraded Turkey's rating by one notch late Sept. 23 to the speculative or "junk" level of "Ba1," citing the country's institutional problems and economic slowdown.

Deputy Prime Minister Mehmet Şimşek has said the July 15 coup attempt was not the main cause behind the Moody's rating downgrade but rather that ongoing structural problems were to blame, adding that Turkey would overcome these issues and make efforts to address structural problems rather than succumb to emotions after the downgrade.

Turkey will draw lessons from its credit downgrade to "junk" by Moody's but is already tackling some of the challenges highlighted by the agency, including structural reform and improving the quality of its institutions, Finance Minister Naci Ağbal told Reuters. 

The Moody's rating cut last week is continuing to draw a fierce reaction, especially from the government. But we can expect these reactions to calm down after a week or so. 

A senior representative from Japan Credit Rating JCR has said Turkey still preserves its investable position, opposing the general sentiment following the rating cut by Moody's, state-run Anadolu Agency has reported. 

Moody's lowered Turkey's credit rating to "junk" level late on Sept. 23, despite its earlier decision after the bloody coup attempt of July 15 that it would wait and monitor developments for three months before making a final decision.

Everyone agrees that if the coup attempt on July 15 had succeeded, Turkey's economy would have gone into a tailspin. The steps taken by the government under its "emergency rule," however, also appear to be achieving the same result. 

Credit ratings agency Moody's has downgraded Turkey's sovereign credit rating to non-investment grade.

What does that mean? This is an issue for economists and I am not an economist.

So why am I writing about this subject? I do so because I find the statement after the decision by Mehmet Şimşek, the deputy prime minister responsible for the economy, very important.

Turkey's markets and currency were seeking recovery after shares tumbled 4 percent and bonds and the Turkish Lira weakened sharply on Sept. 26, the first trading day after Moody's cut its credit rating to "junk," raising risks of an outflow of foreign funds and a squeeze on external borrowing.

Turkish shares tumbled 4 percent while bonds and the lira also weakened sharply on Sept. 26 after ratings agency Moody's cut Turkey's sovereign rating to "junk," triggering fears of an outflow of foreign funds.