Credit ratings agency Moody's Investor Service on Saturday has downgraded Turkey's sovereign credit rating to non-investment grade citing worries about the rule of law following an attempted coup, risks from external financing and a slowing economy. The agency, which cut the government's long-term issuer and senior unsecured bond ratings debt to Ba1 from Baa3, kept Turkey's outlook as stable, saying its "flexible" $720 billion economy and strong fiscal track record offset the balance-of-payments pressure it faces. Moody's decision followed a reduction to two notches below investment grade by S&P Global Ratings in the immediate aftermath of the coup in July. Fitch Ratings is the only major ratings agency that has Turkey as investment grade. Fitch will review its assessment of Turkey at the beginning of 2017. However, President Recep Tayyip Erdogan criticized the rating agencies for being politically motivated. He accused S&P of siding with the coup plotters after its move in July. The Moody's rating cut may mean Turkey will have to pay more to borrow money on international markets. The country's finances have weakened amid the increased political turmoil, Moody's noted. Other sources of concern stem from the response to July's unsuccessful coup attempt which poses questions "regarding the predictability and effectiveness of government policy and the rule of law going forward." It is also noted that "the erosion of Turkey's institutional strength, which was evident prior to the failed coup attempt but which the event may exacerbate, has negative implications both for the level of growth in the coming years and for the implementation of the structural changes the government has identified are needed to deliver balanced, sustainable growth and relieve external pressures." A fall in tourism receipts has also been noted, as part of the effect of Russian sanctions and an increased number of attacks in the country. The decision places Turkey's credit rating in junk territory for the first time. "Increase in the risks related to the country's sizeable external funding requirements" and "the weakening in previously supportive credit fundamentals, particularly growth and institutional strength" have been cited as reasons. Deterioration in the country's credit rating is expected to go on over the next two to three years. S and P already took the step earlier this year. Erdogan noted in a recent interview with Bloomberg that he doesn't "care at all" about prospective downgrades, as ratings companies allegedly made decisions based on politics and not on economic fundamentals. — Agencies