Fitch weighs placing Austria on outlook negative -source

VIENNA Thu Feb 20, 2014 1:14pm EST

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VIENNA Feb 20 (Reuters) - Credit rating agency Fitch may warn Austria on Friday it could face a credit downgrade over concerns about the cost to the government of cleaning up nationalised bank Hypo Alpe Adria, a financial source said on Thursday.

A Fitch credit committee reviewed Austria's position on Thursday, the source said. "It is possible they will place Austria on credit outlook negative," said the source.

A negative outlook means the probability has increased that Austria's rating could be cut by a notch in the next one to two years, which would raise borrowing costs for the government.

Fitch affirmed Austria's rating at "AAA" with a stable outlook in September.

Fitch declined to comment but said it was due to issue an opinion on Austria early on Friday, in line with its sovereign credit rating calendar. Austria's Finance Ministry also declined comment.

Peer credit rating agency Moody's this week downgraded more debt of Austrian banks on concerns that the government has not ruled out letting Hypo Alpe Adria go bust. (Reporting by Georgina Prodhan in Vienna and Jonathan Gould in Frankfurt; Editing by Toby Chopra)

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