Turkey’s local-currency credit rating was raised to investment-grade by Standard & Poors, which cited “continuing improvements” in the country’s financial industry and the expansion of local debt markets. S&P increased Turkey’s local-currency rating one step to BBB-, the lowest investment-grade ranking, and affirmed the foreign-currency sovereign rating at BB, two levels below investment grade, with a positive outlook, according to an e- mailed statement today. Turkish shares rallied, lifting the ISE National 100 index the most in more than a year, by 4.4 percent at 3:07 p.m. in Istanbul. The lira strengthened 1.3 percent against the dollar. “The local-currency upgrade reflects our view of continuing improvements in Turkey’s financial sector and the deepening of local markets,” Frank Gill and Leila Butt, London- based analysts at S&P, wrote in a statement today. “The Turkish banking system is adequately capitalized and we expect the state will reduce its holding of some public-sector commercial banks.” The average maturity of local-currency debt, which makes up three-quarters of general government liabilities, has increased to 34 months in 2011 from 24 months in 2008, the analysts said. Government debt is now mostly denominated in liras, S&P said The higher rating for local-currency debt “says that they are less worried by public finances, but are still worried by the external financing position,” Tim Ash, chief emerging- markets economist at Royal Bank of Scotland Group Plc in London, said in an e-mailed response to questions. “Still welcome news.” To contact the reporter on this story: Steve Bryant in Ankara at sbryant5@bloomberg.net To contact the editor responsible for this story: Steve Bryant at sbryant5@bloomberg.net

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