Fitch says risk lower of euro exit for Greece
NEW YORK, June 18 |
NEW YORK, June 18 (Reuters) - Fitch Ratings on Monday said it saw a lower risk of a disorderly Greek debt default and exit from the euro area following the narrow victory for the pro-bailout New Democracy party in Greek parliamentary elections on Sunday.
The conservative leader of New Democracy, Antonis Samaras, will now try to form a new government after edging out the radical leftist anti-bailout party SYRIZA, causing relief across the euro zone. SYRIZA had vowed to tear up the 130 billion euro ($164 billion) rescue agreement with the European Union and International Monetary fund..
"A new government that is supportive of the EU-IMF programme is likely to be in place prior to the EU Leaders Summit on 28-29 June," Fitch said in a statement.
"Consequently, Fitch will not place all eurozone sovereigns on Rating Watch Negative as it had indicated would be the case if a Greek euro exit were a probable near-term event," it said.
Fitch rates Greece's credit at CCC, a highly speculative grade that is not far away from default. It is similar to the ratings held by Standard & Poor's and Moody's Investors Service.
Any new government, Fitch said, is likely to be a fragile one given the opposing viewpoints of the two leading parties and SYRIZA ruling out joining a pro-bailout coalition government.
"Downward pressure on the sovereign credit profile and ratings of eurozone sovereign governments will intensify so long as a credible path to closer union and a more coherent and united policy response are absent. This includes further boosting the financial backstops against contagion," Fitch said.
- Tweet this
- Share this
- Digg this