Fitch holds Spain AA- rating, urges deficit measures

22nd November 2011, Comments 0 comments

Credit rater Fitch maintained Spain's AA- rating with a negative outlook on Tuesday but urged "additional measures" by the incoming conservative government to cut the budget deficit.

"Spain's new government will need to legislate for additional measures to meet the deficit targets laid out in the country's existing stability programme," Fitch said in a statement, reiterating the AA- rating.

Fitch and the other two major credit ratings agencies, Standard & Poor's and Moody's, each downgraded Spain's sovereign debt last month, warning it was at risk from the eurozone debt crisis.

Moody's cut Spain's rating by two notches to A1 from Aa2 on October 18, days after Standard & Poor's lowered its Spain rating to AA-minus from AA. Fitch had earlier slashed Spain's rating by two notches.

Standard & Poor's also said on Monday its credit rating for Spain was not affected by the election victory.

Spain has suffered since 2008 from the global financial crisis and the bursting of a domestic housing bubble that year. Unemployment is at 21.5 percent.

The conservative Popular Party won its biggest victory every in Sunday's election, chasing out the governing Socialists.

The winning party's leader Mariano Rajoy has promised deep austerity cuts "everywhere" except in pensions, but has yet to announce the details. He is expected to form a government by the end of the year.

"The government's fresh mandate... provides a window of opportunity," the Fitch statement said Tuesday.

"If it is to improve market expectations of its capacity to grow and reduce debt within the confines of the eurozone, it must positively surprise investors with an ambitious and radical fiscal and structural reform programme."

© 2011 AFP

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