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TEXT-Fitch cuts 11 Spanish local and regional governments & 5 PSEs
(The following statement was released by the rating agency)
June 08 - Fitch Ratings has downgraded 11 Spanish local and regional governments and five credit-linked public sector entities (PSE). The rating actions follow the agency's downgrade of the Kingdom of Spain's Issuer Default Rating (IDR) to 'BBB'/Negative/'F2' from 'A'/Negative/'F1' (see 'Fitch Downgrades Spain to 'BBB', Outlook Negative' dated 07 June 2012 at www.fitchratings.com).
The rating actions reflect the downgrade of the sovereign. They also reflect the application of Fitch's criteria, according to which subnationals' ratings cannot be higher than the sovereign, except in certain specific circumstances (see "Rating Subnationals above the Sovereign - Outside US". The downgrade of the Basque Country, the Three Basque provinces, the City of San Sebastian and the Basque Transport Consortium reflects that they have exceeded the maximum leeway/headroom for a subnational rating above the sovereign of three notches.
PSEs owned by Spain's sovereign or subnational governments have also been downgraded reflecting the application of the agency's "Rating of Public Sector Entities - Outside the United States" methodology, according to which dependent entities cannot be rated above the owner (sponsor).
The respective bond issues/senior unsecured ratings have also been downgraded.
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