Reaction against the Statements of International Credit Rating Agencies for Turkey

It is stated that the rating of these agencies is not objective and scientific. Asst. Prof. Dr. Lokman Kantar from Istanbul  Gelisim University (IGU), by stating that trust towards these agencies S&P, Moody’s and Fitch  were shaken on a global scale during the 2008 economic crisis, he continued “from the beginning of the year 2018, S&P and Moody’s, and lastly on 13th of July, Fitch decreased the credit note of Turkey. Whereas Greece’s economic indicators have been worse, they increased Greece note in June”.

Reaction against the Statements of International Credit Rating Agencies for Turkey

The credibility of International Credit Rating Agencies is controversial. Another negative statement was made by Fitch yesterday, yet it decreased Turkey’s note on 13^th of July lastly. The statements of International Credit Rating Agencies for Turkish economy also draw the reaction of academia much as politicians. Fitch which is one of these agencies said in yesterday’s statement, “The weather became worse since the note reduction. A steep decline in economy may trigger note reduction”. Asst. Prof. Dr. Lokman Kantar from Istanbul  Gelisim University (IGU) commented on the views of leading international credit rating agencies, especially Fitch, for economic markets in the world and in Turkey.
 
"TO WHAT EXTENT THESE AGENCIES ARE CREDIBLE"

Asst. Prof. Dr. Lokman KANTAR from IGU, by stating that the production is one of the most important indicators of economic development, said “Capital which is one of the production factors is extremely important for a country. When the countries cannot meet their need for capital through domestic savings, they prefer to meet this need through direct foreign investments or portfolio investments. Foreign investors need to know the risks of that country in order to invest in another country’s securities issued in the currency of that country. At this point, international credit rating agencies determining the risks of both the countries and the companies which are in need of funds are needed, but the fact that to what extent these agencies are credible is arguable”. Kantar also added, “There are several international rating agencies involved in credit rating activities in the world. The most known ones among these agencies which dominate 95 percent of the market are S&P, Moody’s and Fitch. These agencies operating since the 1850s provide information for the investors who have fund surplus for enabling them to invest in a country which they do not know.
 
"CRITICISMS TOWARDS THESE AGENCIES INCREASED AFTER 2008"

Stating that the credit rating agencies, which had given a very high note to Enron which was one of the leaders in the energy sector after September 11, 2001 attacks, caused a big scandal with the arising crisis, Kantar said, “With the 2008 Global Crisis, criticisms towards these agencies have started to increase exponentially. Because it could not be foreseen that the establishments rated with a very high score in the 2008 global crisis period (for example Lehman and Brothers) were bearing high risk in the crisis period. For this reason, investors investing without knowing the high risk have suffered enormous losses. One of the most important reasons of distrust towards S&P, Moody’s, Fitch is that they create a panic atmosphere and deepen the crisis by trying to compensate the risks they could not determine beforehand by reducing the notes in the crisis environment.  One of the other most important criticisms towards these credit rating agencies is that they lose their objectivity for the reason of giving consultancy service against a consideration to the establishments that they assess.
 
"THEY MAKE POLITICAL DECISIONS ABOUT TURKEY "

Asst. Prof. Dr. Lokman Kantar from Istanbul Gelisim University said that these agencies state credit notes for countries or establishments by assessing them unilaterally despite they have no contracts with those countries or establishments, and this creates a panic atmosphere in the financial markets, and thus both the such countries and the foreign investors who invest in these countries suffered from great losses. Kantar added, “since the beginning of 2018, S&P, Moody’s and lastly on the date of 13^th of July Fitch decreased the Turkey’s credit note.  As the reasons for the note reduction, increase in inflation, political uncertainty, deficit in current account balance were given. However, the Greece having worse macroeconomic indicators, even in the heavy crisis period, was treated stingily in terms of note reduction. These credit rating agencies which made an increase in Greece’s credit note last June, especially S&P, by giving not investable note when it comes to Turkey, which applied strict financial policies after the 2001 crisis, even in the periods that the inflation was reduced to one digit and growth numbers were raised to 7-8 percent, raises the suspicion of making extremely political decisions. For the reasons of given notes by these credit rating agencies cannot be inspected and they do not conduct transparent assessments, strengthening of the CDS (Credit Default Swap) will restrict these agencies to be in political and biased behaviors.”