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Comments from Fitch and EU Commissioner on Greece & Credit Ratings

February 9th, 2010 Michael McDonough

EU Commissioner Joaquín Almunia Mira recently said that he believes the current situation is the most difficult situation the EU has ever faced, and that Thursday’s meeting will be critical.  He also said EU leaders have indicated that they will support Greece.  Fitch anticipates that a Greek plan is ‘achievable’, but not ‘a given’.  Fitch’s analyst said, “A bailout for Greece is not completely out of the question but the likelihood of it happening is not strong enough for Fitch to base its ratings outlook on.”  Reuters is also indicating that in principle German government officials are ready to help Greece, and along with other CBs and governments are studying support plans.  German press is reporting that German officials are working on a support plan for Greece.

Fitch also highlighted that Greece could come under some serious pressure in April/May when the bulk of its debt outstanding is coming due.  Fitch also believes the UK is the most vulnerable AAA rated sovereign, stating the credit needs a ’strong exit strategy’.   Fitch went on to say that the default probability for Portugal is close to 0.

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