Fitch downgrades Spain’s credit rating - Gayo Lues

The international agency announced on Thursday that it has cut the credit ratings of eight autonomous regions of Spain including Andalusia, Asturias, the Canary Islands, Cantabria, Madrid, Murcia, Catalonia and the Basque region with a negative outlook.

According to a Fitch statement, the agency placed the regions on Rating Watch Negative (RWN) on 9 March 2012, and indicated that it would resolve the RWN by the end of May.

“Following the downgrades, the Long-term ratings of all the Autonomous Communities under the common regime that were on RWN are now in the ‘BBB’ category, while the Basque Country is rated ‘A+’ and the Autonomous Community of Madrid, which was not been placed on RWN, is rated ‘A-’,” the statement added.

Fitch also noted that the downgrades reflect the negative economic and market environment in Spain, which has resulted in depressed fiscal revenues, and the structural fiscal deficits of the regional administrations.

Meanwhile, the European Union is calling on Madrid to come clean on how it plans to finance the overhaul of its banking sector.

Doubts over how recession-hit Spain will handle the bailout have sparked concerns that the country will soon follow Greece, Portugal and Ireland and ask for financial assistance.

Earlier this week, the European Commission said Spain is on top of the list of the eurozone 12 critical economies due to deepening financial crisis.

Spain’s central bank reported on Tuesday that the country’s economy will shrink in the second quarter of 2012, with the recession expected to continue until at least mid-2012.

TNP/SS