FAST FIVE: Turkey Sinks Deeper Into Junk After Moody's Downgrades To B1, Warns Of Government Default Risk

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Concurrently, Moody's has downgraded to B1 from Ba3 the backed senior unsecured bond ratings of Hazine Mustesarligi Varlik Kiralama A.S., a special purpose vehicle wholly owned by the Republic of Turkey from which the Turkish Treasury issues sukuk lease certificates, and has maintained the negative outlook.

Turkey is structurally highly reliant on external capital flows, and Moody's confidence in its ability to continue to attract the large sums needed each year to repay debt and sustain growth is waning.

Foreign exchange reserve buffers are weak and Moody's expects them to weaken further over the next two years relative to economy-wide short-term liabilities.

The imposition of sanctions on Turkey could also lead to a further, highly credit negative, market reaction.

Instead, they provide a measure of relative creditworthiness within a single country.

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