Fitch grants Turkey's İzmir top investment grade

Fitch ratings agency has increased its national long-term rating on İzmir, the third largest province in Turkey on the Aegean coast, to its top grading "AAA" from the current "AA+" with a stable outlook. 

So far, the industrialized tourism destination achieved the top "investable" rating from two top agencies, Fitch and Moody's. 

"The affirmation is driven by İzmir's "sustainable strong operating performance, with operating margins above 50 percent in 2016 and the city's prudent management as well as its resilient local economy supporting the local tax base," a statement by the agency read on May 26. 

"The affirmation also takes into account the municipality's core responsibilities and corresponding operating spending and high capital expenditure needs," it said. 

The upgrade of the national rating is based on the fact that "the city has continued to record strong operating margins while accelerating capex projects prior to upcoming elections and fulfilling its additional responsibilities following the enlargement of the metropolitan area while maintaining healthy liquidity levels," it also said. 

The agency also affirmed İzmir's long-term foreign-currency issuer default rating (IDR) at "BB+" and long-term local-currency IDR at "BBB-." The outlooks on the IDRs are stable. 

Any negative rating action on Turkey would be mirrored on İzmir's IDRs, the agency warned. "A sharp increase in İzmir's direct debt to current balance above two years, driven by capex and local currency devaluation could also lead to a downgrade."

"In line with our expectations, İzmir's well-diversified local economy remained resilient to adverse shocks. Combined with controlled operating expenditure, it achieved an operating margin of...