News Daily Spot: Moody's and Fitch considered the 20-D 'negative' for the solvency of Spain

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Moody's and Fitch considered the 20-D 'negative' for the solvency of Spain

Rating agencies Moody's and Fitch warned in separate reports released to market close that the outcome of the general election is "negative" and carries "risks" to the solvency of Spain.

"Increased political uncertainty and raises doubts about the ability of the new government and its willingness to continue with structural reforms and fiscal consolidation," summarizes the report d Moody's. In his view "a failure in forming the new government and new elections would lead to a prolonged period of political uncertainty." 

"The election result is negative [when examining the solvency of Spain]," says the report's author, Dietmar Hornung.En Fitch, 20-D "increases the risk of prolonged political uncertainty and, potentially a more relaxed fiscal and structural reform reversal. 

" At the moment, however it kept Spain's rating at BBB, above the 'junk' seeing no imminent danger for the creditworthiness of the country. "Mariano Rajoy said he will try to form a government, but it can take time and their options appear limited . 

A large PP-PSOE coalition would most but seems politically unlikely ".Fitch speculates that" no possibility of new elections next year ".

The international agency analysts believe that the emergence of Citizens can and has led to Spain" to a new era, "but they said that" if the result is a weak government or one that relies on radical parties, it may be the reversal of previous reforms and a relaxation deficit control. "

" The fiscal adjustment in Spain is still incomplete. The debt will reach 99% this year and 90% lower in 2024, as our central scenario ", well above the states, like Spain, are above junk bond rating. However, Fitch does not see short-term problems, "because the budget for 2016 already approved (...) although elections increased risk of diversion." 

The problem, in his opinion is "a long period of political uncertainty" because "it would damage confidence and would turn the current macroeconomic dynamics". 

In this cocktail, Fittch adds the problem of Catalonia, which considered more complicated to solve ahora.Las rating agencies made mistakes during the financial crisis, but still referring to markets around the world when deciding where to place their investments .

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