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Turkey Struggles to Keep its Default

Financial markets in Turkey have sold off since the beginning of this year amid political uncertainty and added pressure from last year’s rise in US interest rates. The country’s Sovereign EDFTM (Expected Default Frequency) metric1, which measures the expected probability of default over a five-year time horizon, increased from 0.82% on January 4 to 0.90% as of January 27 (see Exhibit 1). [...]