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UPDATE 1-EU aid for Greece unlikely, no rating impact - Fitch

* EU aid deal on Greece unlikely at summit - Fitch

* Fitch: Greek rating unaffected as long as IMF option open

* S&P: focus is on reforms, standalone fundamentals

(Adds quote, S&P interview)

By Ingrid Melander

ATHENS, March 23 (Reuters) - Fitch Ratings doubts EU leaders will offer Greece aid at a summit this week but failure to agree a bailout would not trigger a downgrade as long as the option of going to the IMF remains open, an analyst at the agency said.

European Union leaders are due to meet in Brussels on Thursday and Friday as debate rages over whether they will overcome German opposition to agreeing a mechanism for helping Greece and other indebted member states. [ID:nLDE62M130]

“It’s become quite clear, Germany is not going to play ball,” said Chris Pryce, Fitch’s senior analyst for Greece. “I don’t think an EU bailout, in the sense of providing money or guarantees for Greece, is now likely.”

Fitch has a BBB+ rating on Greek debt with a negative outlook. Asked if the firm would cut that rating in the absence of EU help, he said: “Not as long as the IMF option exists and is likely or actively pursued.”

In a separate interview Standard and Poor’s analyst Marko Mrsnik said his firm would continue to focus on Greece’s implementation of its austerity programme rather than the issue of any possible EU help.

Fitch’s Pryce said that even if neither the EU nor the IMF came to the rescue any downgrade would still depend on the market reaction.

“As long as the market is prepared to make the money available to the Greek government at any reasonable price -- current rates are reasonable given circumstances although not desirable -- we would have no immediate reason to change the rating,” Pryce said.

REFORMS

German government officials signalled for the first time on Tuesday that there may be aid at some stage provided the IMF was also involved and as a last resort if Greece was unable to get funds on the open market.

Pryce said Greece’s capacity to contend with a 300 billion euro ($404.5 billion) debt mountain and plans for further reforms in the coming years would be key to the country’s rating. Greece needs to raise at least 16 billion euros by the end of May as 23 billion euros worth of debt matures.

“We will be expecting and hoping by May not just that they have raised the money necessary to see through this year but also that they have issued indications as to the policies for next year,” Pryce said.

“It may well be the current rating will survive the year and stay on negative outlook.”

The other two major rating agencies, S&P and Moody’s, both also have Greece on negative outlook.

S&P affirmed its BBB+ rating last week but warned the country was still at risk of a rating cut within the next 18-24 months if it failed to implement its deficit-cutting plan.

S&P’s Mrsnik said wrangling among EU member states over whether to help Greece did not enter the equation when calculating his rating. “This (any EU aid) would most probably provide breathing space rather than a full solution. So the focus will continue to be on the sustained implementation of the consolidation programme and structural reforms,” Mrsnik said.

He said EU assistance would support the debt-laden country’s rating if it led to a sustained reduction in the government’s cost of capital and, in the process, reinforced the government’s commitment to fiscal consolidation. (Editing by Stephen Nisbet)

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