Fitch puts 14 Spain authorities on downgrade watch

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Fitch Ratings warned Wednesday it may downgrade the credit rating of 14 territories in Spain including the key regions of Madrid and Andalucia.

Fitch placed the credit rating of the 14 regional and local authorities on 'Ratings Watch Negative,' meaning they could be lowered, it said in a statement.

The action was in line with Fitch's overall rating on Spain, which was among six eurozone countries it placed on downgrade watch on December 16. Spain has an AA- rating from Fitch.

"The RWN indicates that the ratings are under active review and are subject to a heightened probability of a downgrade in the near-term," Fitch said.

"Fitch expects to complete the review by the end of January 2012. If the review concludes that a downgrade is warranted, it is likely be limited to one or two notches."

As well as the Madrid region and Andalucia, the downgrade warning targeted the regions of Asturias, the Canary Islands and Cantabria.

The other ratings affected were for the city authorities of Madrid, Pamplona, Vigo and La Coruna, two separate city and provincial authorities of Barcelona, and three other territories: Alava, Bizkaia and Gipuzkoa.

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

Spain has already imposed spending cuts on its regions in its efforts to trim the national deficit, which is a big worry for the financial markets that lend it money.

Prime Minister Mariano Rajoy, who took office on Wednesday, has vowed to deepen the cuts and pass urgent fiscal and labour reforms to boost the economy and reassure investors.

© 2011 AFP

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