How important is the sovereign credit grade: The example ofTurkiye

The history of international rating agencies dates back to the American railway bonds. Organizations aiming to provide information to investors about railway bonds have been operating for the same purpose for more than a century. Today, these organizations give direction to international capital flows with the ratings they give to countries and private sectors. They have been subjected to serious criticism in the literature because of the high ratings given by the organizations to the companies that went bankrupt in the 2008 Global Crisis, just before such institutions went bankrupt. In this study, the focus is on three internationally recognized major rating agencies that are and at the center of criticism: Moody's, S&P and Fitch. The rating methodologies of the organizations were examined in detail. Thus, the main macro-economic indicators for Turkey were selected from the factors that they paid attention to in the evaluation criteria, on the condition that they continue without interruptions from 1992. In the application part of the study, it has been investigated whether there is an interaction between the dominant evaluation notes given by the institutions to Türkiye and the selected basic macro indicators. The relationship between the ratings given to Türkiye and growth, inflation, borrowing and exchange rate in the 1992-2021 period was analyzed with the VAR model. As a result of the VAR analysis, impact-response and variance decomposition analyzes were made and the general finding of the study about the country rating grades; It has been concluded that Türkiye's macro-economic indicators are not affected by the credit ratings, but the ratings are mainly affected by growth, inflation and exchange rate.