After last week’s coup attempt, Turkey’s government rushed to search for rebels and those who could have provided them with support. Turkey’s authorities seem to recognize traitors anywhere, among teammates from the ruling party and surprisingly among developers of the popular game, Pokemon Go.
In the wake of the coup, S&P Global Ratings lowered Turkey’s sovereign debt rating two notches below investment grade and assigned a negative outlook. Cemil Ertem, the president’s adviser, made critical comments on this decision. "If we look at markets, interest rates, currency exchange rates, we can see that after July 15, the government did not make big interference. We are now at the level of 3.07. No serious intervention and no big losses," the official highlighted. Under these circumstances, he assumes S&P’s decision to sustain rebellious sentiment in the country. Indeed, the agency warns that rising political uncertainty after the failed coup could scare off investment and undermine fiscal management.
Credit risks always increase at a time of political turbulence. Following S&P’s move, Moody’s Investor’s Service also downgraded Turkey’s sovereign credit rating to the lowest level of investment grade. On July 15, an opposition group within the Turkish Armed Forces attempted a coup d’état against the government. The rebels were backed by military vehicles and fighter jets. Violence flared up in Istanbul and Ankara. However, the pro-government troops managed to quell the riot.
