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Rating agency Fitch downgrades Spain, Italy's creditworthiness

Business Materials 8 October 2011 01:28
Rating agency Fitch downgraded Spain and Italy's creditworthiness in a double blow to the euro currency late Friday, DPA reported.
Rating agency Fitch downgrades Spain, Italy's creditworthiness

Rating agency Fitch downgraded Spain and Italy's creditworthiness in a double blow to the euro currency late Friday, DPA reported.

Italy was reduced one notch to the fifth-highest grade, A-plus, while Spain was ranked one position higher, at AA-minus, a drop of two positions.

The announcements came within minutes, putting pressure on the euro, which lost more than 1 cent against the dollar, while investors fled to safer purchases such as German bonds.

Fitch is the smallest of the three leading Wall Street rating agencies, alongside Moody's and Standard & Poor's, who had both already downgraded Italy's creditworthiness since last month.

Negative perspectives for both Mediterranean eurozone members made further downgrades possible in coming months.

Fitch justified its decision with the risk that the eurozone debt crisis presented for both countries. Italy and Spain are the third and fourth largest economies, respectively, within the 17-member currency union.

The rating agency maintained a negative outlook for Portugal, which currently ranks at BBB-minus, one notch above the so-called junk status used to identify particularly risky investments.

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