Fitch on European sovereign debt ratings - debt a challenge but momentum positive

Author: Eamonn Sheridan | Category: News

Fitch Ratings latest:  "Western Europe Sovereign Credit Overview - 2Q18"

Three key drivers of Western European sovereign ratings,
  • Public debt dynamics
  • macro outlook
  • politics
Interplay of strong growth and improving public finances underpins positive near-term rating momentum
  • but reducing debt is a long-term challenge and may be hampered by political developments
The rating momentum for Western European sovereigns is positive
  • Since October 2017, there have been six rating upgrades (Cyprus, Greece, Iceland, Ireland, Portugal, Spain) and no downgrades.
  • Three countries are on Positive Outlook (Andorra, Cyprus and Greece), indicating that an upgrade is likely over a one- to two-year horizon
  • The United Kingdom remains the only country on Negative Outlook, reflecting the uncertainty and corresponding downside risks following the decision to leave the European Union
Fitch does caution - difficult to foresee current western European sovereign upward rating momentum being sustained without bigger reduction in government debt burdens over time