Turkey ratings outlook adds to political uncertainty

Snap election risk is now substantial as escalating internal and external security risks have inflamed Turkey's political rhetoric and already tense coalition talks between AKP and CHP. 

The increase in snap election risk is largely priced in as risk premia on TRY assets has risen in recent weeks. However, further depreciation pressures in Turkish assets are likely if snap election risk is realized. Additionally, recent economic developments have been largely negative. 

According to Barclays,
1) The risks to the sovereign rating outlook have risen 
2) Downside risks to growth are higher
3) The perception of rising political/geopolitical risks could increase dollarization
4) Corporate sector FX mismatches will be exposed.