Fitch Ratings has downgraded Austria’s Long-term foreign and local currency Issuer Default Ratings (IDR) to ‘AA+’ from ‘AAA’. The Outlooks are Stable. The issue ratings on Austria’s unsecured foreign and local currency bonds have been downgraded to ‘AA+’ from ‘AAA’. Fitch has affirmed the Short-term foreign currency IDR at ‘F1+’ and Country Ceiling at ‘AAA’.
- Liquidity constraints have narrowed the timeframe during which Greece’s new government can reach an agreement with its official creditors on a financing programme, in our view.
- We believe the potential uncertainties surrounding the timing and success of such an agreement risk exacerbating deposit outflows, depressing investment, and weakening tax compliance.
- As a result, we have lowered our long-term rating on Greece to ‘B–’ from ‘B’.
- The long- and short-term ratings remain on CreditWatch negative.
Moody’s Investors Service has today downgraded Russia’s government bond rating to Baa3/Prime 3 (P-3) from Baa2/Prime 2 (P-2). The rating was also placed on review for further downgrade.
The key drivers behind the downgrade are:
- Moody’s expectation that the substantial oil price and exchange rate shock will further undermine the country’s already subdued growth prospects over the medium term; and
- Moody’s nearer-term concerns over the negative impact on the government’s financial strength of the erosion in official foreign exchange buffers and fiscal revenues.
Fitch Ratings has downgraded Russia’s Long-term foreign and local currency Issuer Default Ratings (IDR) to ‘BBB-‘ from ‘BBB’. The issue ratings on Russia’s senior unsecured foreign and local currency bonds have also been downgraded to ‘BBB-‘ from ‘BBB’. The Outlooks on the Long-term IDRs are Negative. The Country Ceiling has been lowered to ‘BBB-‘from ‘BBB’. The Short-term foreign currency IDR has been affirmed at ‘F3’.
London, 12 December 2014
Fitch Ratings has downgraded France’s Long-term foreign and local currency Issuer Default Ratings (IDR) to ‘AA’ from ‘AA+’. This resolves the Rating Watch Negative (RWN) placed on France’s ratings on 14 October 2014. The Outlooks on France’s Long-term ratings are now Stable. The issue ratings on France’s unsecured foreign and local currency bonds have also been downgraded to ‘AA’ from ‘AA+’ and removed from RWN. At the same time, Fitch has affirmed the Short-term foreign currency IDR at ‘F1+’ and the Country Ceiling at ‘AAA’.
- We have revised our average real and nominal GDP growth projections for Italy over the 2014-2017 forecast horizon down to 0.5% and 1.2%, respectively, from 1.0% and 1.9%, as persistently low inflation and a difficult business environment continue to weigh on Italy’s economic prospects.
- In our opinion, Italy’s weak real and nominal economic prospects have undermined public debt dynamics more than we forecast in our June 6, 2014 report. In absolute terms, we now estimate Italian general government debt will be €2.256 trillion by year-end 2017, which is €80 billion higher (or 4.9% of estimated 2014 GDP) than we forecast in June.
- Under our criteria, such a large increase in debt, combined with consistently low growth and eroded competitiveness, are not commensurate with a ‘BBB’ rating.
- We are therefore lowering our long- and short-term sovereign credit ratings on Italy to ‘BBB-/A-3’ from ‘BBB/A-2’.
- The stable outlook reflects our expectation that the government will gradually implement comprehensive and potentially growth-enhancing structural and budgetary reforms, and that household balance sheets will remain strong enough to absorb further increases in public debt. We also assume the European Central Bank’s monetary policy stance will continue to support a normalization of inflation in Italy and its key eurozone trading partners.
- We have revised downward our assessment of Finland’s economic growth prospects, as we believe that continuing subdued external demand adds to structural economic and demographic challenges.
- The weaker economic backdrop will further complicate efforts to consolidate public finances and reduce public debt, in our view.
- We are therefore lowering our long-term sovereign credit ratings on the Republic of Finland to ‘AA+’ from ‘AAA’.
- The outlook on the long-term ratings is stable.