Fitch Ratings said Friday that it has downgraded the long-term Issuer Default Ratings of Spain, Italy, Belgium, Cyprus and Slovenia, and affirmed the long-term Issuer Default Ratings of Ireland.
Fitch downgraded Spain's long-term Issuer Default Rating to 'A' from 'AA-', Italy's to 'A-' from 'A+', Belgium's to 'AA' from 'AA+', Cyprus' to 'BBB-' from 'BBB' and Slovenia's to 'A' from 'AA-'.
The rating agency affirmed Ireland' long-term Issuer Default Rating at 'BBB+'.
All the ratings have been removed from Rating Watch Negative, with the Negative Outlook on all six countries indicating a slightly greater than 50% chance of a downgrade over a two-year time horizon, Fitch said.
"Overall, today's rating actions balance the marked deterioration in the economic outlook with both the substantive policy initiatives at the national level to address macro-financial and fiscal imbalances, and the initial success of the ECB's three-year Long-Term Refinancing Operation in easing near-term sovereign and bank funding pressures," Fitch said in a statement.
"Nonetheless, the intensification of the eurozone crisis in the latter half of last year undermined the effectiveness of ECB monetary policy and highlighted the financing risks faced by eurozone sovereign governments in the absence of a credible financial firewall against contagion and self-fulfilling liquidity crises," the rating agency added.
Fitch had placed the sovereign ratings of the six Euro Area Member States on Rating Watch Negative on December 16. The rating agency had also lowered the outlook on France's AAA rating at the same time, though the company said in January that France's rating probably would not be cut this year.
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