Friday, May 11, 2012

Fitch warns euro zone of downgrades if Greece exits

Credit rating agency Fitch put the whole of the euro zone on notice today that were Greece to leave the currency bloc as a result of its current crisis, the remaining countries could find their sovereign ratings at risk.

It said it was likely to put all euro area ratings on negative watch if Greece were to leave and that those countries which currently have a negative outlook on their ratings would be at most immediate risk of a downgrade.

It said those countries were France, Italy, Spain, Cyprus Ireland, Portugal, Slovenia and Belgium.

"In the event of Greece leaving (the euro), either as a result of the current political crisis or at a later date as the economy fails to stabilise, Fitch would likely place the sovereign ratings of all the remaining euro area member states on Rating Watch Negative as it re-assessed the systemic and country-specific implications of a Greek exit," Fitch said in a statement.

"The probability and magnitude ... would largely depend on the European policy response and its success in limiting contagion, as well as outlining a credible vision of a reformed (euro zone)," it said.

"Nonetheless, the sovereign ratings of all euro zone member states would potentially be at risk," Fitch said.