Eyes on S&P as OECD's Guirra says time for Turkey credit upgrade
It should be only a matter of time before Ankara secures a new investment-grade rating given the current level of interest and expectations in markets, Organization for Economic Co-operation and Development (OECD) Secretary-General Angel Gurria told Today's Zaman in an exclusive interview on Wednesday in Germany's Leipzig, describing the possible upgrade as "a well-deserved success." Gurria's comments came just one day ahead of news that the Japan Credit Rating Agency (JCR) became the third agency that upgraded Turkey's credit rating to investment grade. Moody's Investors Service last Thursday upgraded the Turkish economy to Baa3, or investment grade -- the second agency to do so after a similar upgrade by rater Fitch in November. Standard & Poor's, meanwhile, rates Turkey at just a notch below investment grade. S&P is slated to hold a major seminar on Turkey's conference on June 4. "The markets have already started pricing it [anticipated news of a new investment grade rating for Turkey]. I see a third investment grade must follow the first two before the end of this year. ...Turkey is a valuable member for the OECD and we are proud to observe the progress they have made," he explained, underlining that the country has done a "remarkable job in minimizing impacts from global fluctuations." Moody's report on Turkey last week said reforms gave the EU candidate a better footing for handling external shocks. Gurria was speaking on the sidelines of the OECD's International Transport Forum, which kicked off on Wednesday and will run through May 24. Moody's move has led to excitement over new foreign direct investment (FDI) flows to Turkey because many of the world's largest institutional funds require a country to be considered investment-worthy by at least two rating agencies before they invest. However Gurria's early "congratulations" to Turkey may sound, observers have earlier said the pressure is now on S&P to follow its rivals, and the OECD head agrees: "These things tend to happen in waves. ... The current level of interest already shows a new upgrade is at hand. Turkey is then going to attract more resources available both in terms of supply and also the cost. ... This is good news." Gurria's statements on Wednesday arrive in the face of comments by Turkish government sources who said that "Moody's decision is as correct as it is late." As the OECD secretary-general asserted that the investment grades by two agencies will encourage FDI to Turkey, he said the foreign investors will tend to park their cash in Turkey for longer terms should the necessary state guarantees and low interest rates for loans be provided. Also referring to the slowdown in the Turkish economy, Gurria said he predicted Turkey to grow by 5 percent this year over 2013, a figure one percent higher than the government estimates. Gurria, meanwhile, launched the OECD's latest report, titled "Private Investments in Sustainable Transport." The report estimates that the global investment needs for land transport infrastructure alone will reach $3 trillion by the year 2050. It also highlights the governments' central role in mobilizing private sector funding for these anticipated investments. Gurria said, particularly in the case of such emerging economies as Turkey and his home-country Mexico, the private involvement in large-scale public transport investments should be well-defined and negotiated for projects be sustainable and also benefit public interests.