Fitch joins S&P in Catalonia downgrade warning | Business | Economic and financial news from a German perspective | DW

Fitch said on Thursday that political tensions between the central government and Catalonia “are likely to escalate in the short term”, leading to unpredictable events, including a potential disruption of state liquidity funds to Catalonia.

As a result, the agency has placed Catalonia on a “negative rating watch” footing, meaning they could downgrade from their current BB level, which is already in “speculative” or junk territory.

However, he added in a statement that he expects the current tensions between Madrid and the Catalan authorities to ease. “Over the medium term, our central assumption remains that current tensions will ease and that there will be continued central government support for Catalonia to service its debt.”

Read more: The Spanish Constitutional Court suspends the parliamentary session on the independence of Catalonia

Late Wednesday, Standard and Poor’s (S&P) Global Ratings placed its ratings for Catalonia ‘on CreditWatch with negative implications’, saying the Catalan government’s political confrontation with Spain’s central government had escalated in preparation for a statement. Catalan independence scheduled for Monday.

“We see a risk that this escalation will undermine the coordination and communication between the two governments, which are critical to Catalonia’s ability to service its debt on time and in full,” the statement continued. S&P.

Currently, S&P rates Catalonia’s debt at B+ and B. The agency also expressed hope that it can “resolve” CreditWatch within the next three months, if tensions between Madrid and Barcelona ease.

Read more: Catalan banks prepare to change headquarters after secession

In Spain’s worst political crisis in decades, footage of police beating up unarmed Catalans taking part in Sunday’s vote has sparked global concern. Catalonia is a major driver of Spanish growth and accounts for around 19% of its GDP.

uhe/tr (Reuters, AFP)

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