Fitch Warns Spain of Possible Rating Downgrade
December 28th, 2011
The credit rating agency Fitch has placed on “negative watch” the credit note of five autonomous Spanish regions, four provinces and five municipalities.
The move comes following the recent decision to place Spain’s ‘rating’ under surveillance, along with the other eurozone countries.
Specifically, the five regions whose credit rating are threatened are Andalusia, Asturias, Canary Islands, Cantabria and Madrid, while the four affected provinces are Alava, Vizcaya, Guipúzcoa and Barcelona.
The cities of Barcelona, Madrid, Pamplona, Vigo and La Coruña have also been put under surveillance by Fitch, reported El Mundo.
The rating agency stated that this situation means that the ‘ratings’ of these regional and local authorities are subject to an “active review” and subject to a “high probability of reduction in the short term”.
Fitch expects to complete their analysis at the end of January, and said that in the case of deciding a downgrade, this would be between one and two levels.
“The move reflects primarily the application of Fitch’s criteria by which the ‘ratings’ of subnational issuers normally cannot be higher than those of the sovereign issuer,” the agency said.
As part of this decision, Fitch has also placed on negative watch the notes of the Bank Restructuring Fund (FROB), the State Industrial Holdings Company (SEPI) and the Small and Medium Shipyards (Pymar).
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