–Fitch Analyst Spells Out Downgrade Triggers For Spain, Portugal
LONDON (MNI) – Euro zone sovereign ratings will continue to face
pressures until their fiscal policies and economic recoveries become
sustainable, Fitch Ratings said today.
At a conference here on the European Credit Outlook, David Riley,
Fitch’s Head of Global Sovereign Ratings, said:
“2011 will be a crucial year as governments pursue fiscal austerity
and, at the European level, the new policy framework and rules of the
game are defined for governments and investors.”
“The crisis is systemic in that it reflects concerns about the Euro
and Euro area governance, as well as peripheral country vulnerabilities,
and it will require a European wide as well as national level policy
response”.
“Despite these challenges, Riley continued, “Fitch believes that
underlying credit fundamentals are stronger than current levels of risk
pricing imply, and that the risk of a break up of the Euro zone remains
small. However, until governments are seen to have placed public
finances on a sustainable path and economic recovery is secure,
sovereign credit ratings will remain under pressure and further bouts of
market turmoil are likely.”
He continued to spell out the potential triggers for new credit
downgrades in Europe.
“We see the downgrade triggers for Spain in 2011 as being larger
than expected bank recapitalisation costs costs, a slippage against
fiscal targets also a weaker than forecast recovery,” he said
“The downgrade triggers for Portugal would be a failure to meet its
fiscal targets, an absence of a sustained re-balancing or loss of market
access,” he added.
–London Bureau; Tel: +442078627492; email: ukeditorial@marketnews.com
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