Bloomberg News

Euro Nations’ Credit Ratings at Risk From Greek Exit, Fitch Says

May 11, 2012

Fitch Ratings said all euro-area countries would be placed at risk of a downgrade if Greece drops out of the 17-nation currency union.

The risk of a Greek euro exit would increase if the country forms a new government opposed to the terms of the existing bailout, Fitch said in a statement today. Elections in June, following the possible collapse of coalition talks after the May 6 ballot, will be a “critical event” for Greece and the euro area.

“In the event of Greece leaving EMU, either as a result of the current political crisis or at a later date as the economy fails to stabilize, Fitch would likely place the sovereign ratings of all the remaining euro-area member states on rating watch negative as it re-assessed the systemic and country- specific implications of a Greek exit,” Fitch said in a statement today.

A Greek euro exit would “break a fundamental tenet” of the currency union, which was designed to be irrevocable, the company said.

“In a benign scenario, the spillover and contagion to the rest of the euro zone could be less profound than feared and possibly provide the catalyst for greater fiscal and political integration that would strengthen the viability of Economic and Monetary Union,” Fitch said.

To contact the reporter on this story: Rebecca Christie in Brussels at rchristie4@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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