TEXT-Fitch upgrades Turkey's TOKI to 'BBB-'/Stable

Mon Nov 12, 2012 10:29am EST

Nov 12 - Fitch Ratings has upgraded Turkey's Toplu Konut Idaresi
Baskanligi's (TOKI) Long-Term foreign currency Rating to 'BBB-' from 'BB+' and
Long-Term local currency to 'BBB' from 'BB+'. At the same time the agency has
upgraded TOKI's National Long-Term Rating to 'AAA(tur)' from 'AA+(tur)'. The
Outlooks on all ratings are Stable. The upgrades follow Fitch's similar rating
actions on Turkey on 5 November 2012.

TOKI's ratings are linked to those of Turkey, reflecting its quasi-sovereign
status and extremely high probability of government support. Fitch uses its
public-sector entities rating criteria and applies a top-down approach in its
analysis of TOKI.

The entity is a not-for-profit, quasi-governmental policy institution with a
duty to implement government policies and programmes to support the provision of
low-cost housing and loan facilities for the purchase of social housing. In
recent years the entity has been at the forefront of government-led initiatives
for urban transformation and for the construction of purpose-built facilities
for state departments.

The provision of affordable housing is a high priority for the national
government in the light of strong demand driven by the demographics and lack of
financial resources available. Under its new mandate following the re-election
of the government in 2011 TOKI aims to construct another 500,000 housing units
by 2023, as it did in 2003-2011.

TOKI reports directly to the prime minister's office. It has no share capital
and its reserves primarily consist of retained earnings. Although it is not
consolidated to the state budget, it receives earmarked income appropriations
from that source. TOKI requires authorisation for borrowing and other strategic
decisions from the government while its accounts are audited by the Court of
Accounts, which is accountable to parliament.

An upgrade of Turkey, with continued strong implicit support, would trigger a
rating upgrade, as TOKI is credit linked to the sovereign. A downgrade of Turkey
or negative changes to TOKI's governance that would lead to a dilution of its
legal status or control by the sovereign would trigger a rating downgrade.

Additional information is available at www.fitchratings.com.

The ratings above were solicited by, or on behalf of, the issuer, and therefore,
Fitch has been compensated for the provision of the ratings.

Applicable criteria, "Tax-Supported Rating Criteria", dated 14 August 2012, and
"Rating of Public Sector Entities outside the United States", dated 5 March
2012, are available at www.fitchratings.com.

Applicable Criteria and Related Research:
Tax-Supported Rating Criteria
Rating of Public Sector Entities - Outside the United States
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