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U.S.-based credit rating agency Moody's has upgraded the Baseline Credit Assessment (BCA) of Türkiye's state-owned Halkbank to B3 from Caa1, as the lender moves ahead with plans to raise up to $5 billion through its largest overseas debt issuance to date.
The BCA measures a bank's standalone financial strength, reflecting Moody's assessment of its intrinsic credit profile rather than the potential for external support. While upgrading that measure, Moody's left Halkbank's Ba3 long-term deposit and counterparty risk ratings unchanged with a stable outlook in its July 3 decision, the bank disclosed on Monday.
Alongside the rating action, Moody's granted provisional (P)Ba3 senior unsecured ratings to Halkbank's planned $5 billion Global Medium Term Note (GMTN) program.
A GMTN program enables issuers to tap international debt markets through multiple bond offerings over time instead of a single issuance. Halkbank had previously said the framework would allow it to issue conventional bonds as well as Tier 1 and Tier 2 capital instruments, depending on market conditions.
According to Moody's, the provisional ratings match the bank's Ba3 long-term deposit ratings because securities issued under the program will rank equally with Halkbank's other senior unsecured obligations. The agency noted that final ratings will be determined when individual securities are issued and could differ if their terms materially change.
Moody's indicated Halkbank's ratings could move higher if Türkiye's sovereign Ba3 rating is upgraded and the bank further improves its financial fundamentals, particularly by building sustainably higher core capital.
On the downside, the agency warned that weaker asset quality or profitability stemming from slower disinflation, a deterioration in the bank's funding or solvency profile, a return to unorthodox economic policies, or a downgrade of Türkiye's sovereign Ba3 rating could weigh on future ratings.
The rating update follows Halkbank's renewed push into international debt markets after the resolution of a long-running legal dispute in the United States.
In June, a U.S. federal court dismissed criminal charges accusing the lender of helping Iran evade U.S. sanctions, bringing nearly nine years of litigation to a close. The ruling came after Halkbank fulfilled the terms of a Deferred Prosecution Agreement without paying criminal, civil or administrative fines.
Days later, the bank sought approval from Türkiye's Capital Markets Board to establish the $5 billion GMTN program, its largest foreign borrowing initiative to date.
Among other agencies, Fitch assigned Halkbank a BB- long-term foreign-currency issuer default rating with a stable outlook, while JCR Eurasia rated the lender BB with a stable outlook.
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