Ratings don’t depend on EU help

Fitch Ratings doubts EU leaders will offer Greece aid at a summit this week but believes failure to agree on a bailout would not trigger a downgrade as long as the option of going to the International Monetary Fund remains open, an analyst at the agency said yesterday. European Union leaders are due to meet in Brussels tomorrow and Friday as debate rages over whether they will overcome German opposition to agree on a mechanism for helping Greece and other indebted member states. «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 program 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 the circumstances, although not desirable – we would have no immediate reason to change the rating,» Pryce said. Meanwhile, premium investors’ demand to hold Greek government debt rather than eurozone benchmark bunds tightened yesterday after European Union officials suggested they may help the Mediterranean nation shoulder its fiscal burden. The Greek/German 10-year bond yield spread narrowed to 324 basis points from around 344 bps at Monday’s settlement close. (Reuters, Kathimerini)

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