Turkey: New central bank governor stays course, for now; upgrade debt ratings

  • Governor Kavcioglu held the repo rate at 19% in his first meeting to reassure markets, but dovish shift still clear

  • Sell-off has paused, but will likely resume if rates are cut prematurely. Margin for error is extremely thin

  • We upgrade LCY debt to Hold and FX debt to Buy. Long-term outlook still grim, but risks now fully priced into eurobonds

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