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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’.

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OVERVIEW

  • In our view, Germany has a highly diversified and competitive economy with a demonstrated ability to absorb large economic and financial shocks.
  • Germany also benefits from low interest rates, which help lower sovereign borrowing costs in the medium term.
  • We are affirming our unsolicited ‘AAA’ long-term and ‘A-1+’ short-term sovereign credit ratings on Germany.
  • The stable outlook reflects our view that Germany’s public finances and strong external balance sheet will continue to withstand potential financial and economic shocks.

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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’.

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OVERVIEW

  • The United Kingdom has high monetary, labor, and product-market flexibility, and a wealthy and diversified economy.
  • Output and employment growth have exceeded our previous projections, but the U.K.’s fiscal position has underperformed our expectations and has yet to reflect a strengthening economy.
  • We are affirming our ‘AAA/A-1+’ long- and short-term sovereign credit ratings on the U.K.
  • The stable outlook reflects our assumptions that the U.K. fiscal position will gradually strengthen as real-wage and productivity growth improve toward pre-crisis averages, and that the government that emerges from the May 2015 general election will remain committed to fiscal consolidation.
    Our outlook also assumes the U.K.’s ongoing EU membership.

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OVERVIEW

  • 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.

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OVERVIEW

  • 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.

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New York, May 16, 2014

Moody’s Investors Service has today upgraded Ireland’s rating by two notches to Baa1 from Baa3. At Baa1, the outlook is stable. Concurrently, the short-term rating has been upgraded to P-2 from P-3.

The key drivers of the upgrade of Ireland’s rating are the following:

  • A step change in future debt levels. Moody’s expects that the recent pick-up in Ireland’s growth momentum will speed up ongoing fiscal consolidation and put the government’s debt metrics on a steeper downward path than previously anticipated, leading to a significantly improved outlook for Ireland’s medium-term public debt trajectory.
  • Very sharp reduction in off-balance sheet exposures. The recovery in the Irish property market has resulted in a considerable recent reduction in government contingent liabilities, due both to the accelerated asset sales of Ireland’s National Asset Management Agency (NAMA) and to the disposal of the Irish Bank Resolution Corporation (IBRC) portfolio.
  • Improved credit position relative to peers. Compared to other Baa-rated euro area sovereigns, including Italy (Baa2 stable) and Spain (Baa2 positive), Ireland’s credit profile is recovering more quickly from the euro area debt crisis as a result of its economy’s dynamism and growth prospects. This assessment informs the two-notch upgrade, repositioning the rating at the top of Ireland’s scorecard-implied rating range.

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