Moody's Investors Service placed Turkey's investment-grade credit rating on review for downgrade Monday after President Recep Tayyip Erdogan thwarted a coup attempt that erupted over the weekend.

Moody's said it would review Turkey's Baa3 credit rating, the lowest level of investment grade, to "assess the medium-term impact" of the failed coup on the country's growth and policy making institutions, according to a statement.

Though quashed within hours, the failed takeover threatens to destabilise an economy that depends heavily on capital inflows to finance its current-account deficit. Erdogan's increasingly authoritarian streak was already worrying investors as he pushed his top economic advisers one-by-one from office, stoking fears of policy mistakes and leading to a drop in foreign investment.

Supporters of Turkish President Recep Tayyip Erdogan attend a rally in Kizilay Square in Ankara. Chris McGrath

"The country's slower-than-expected progress in materially advancing planned economic reforms, in the context of both weakening growth and external buffers, had been previously captured in Moody's negative outlook," the analysts wrote. "Although the coup failed, the event in itself will likely exacerbate challenges in all of these areas."

The yield on Turkey's 4.25 per cent dollar bonds due in 2026 rose 22 basis points, or 0.22 percentage point on Monday, to 4.13 per cent.