Don’t Bet on a UK Debt Downgrade: Fitch says



Don’t Bet on a UK Debt Downgrade: Fitch says

The UK does not face the same risk of sovereign debt default as
Greece because it doesn’t have the same structural problems and has
benefited from the falling value of the pound, Andrew Colquhoun,
director, sovereign group at Fitch Ratings Agency, told CNBC Friday.

“The UK has a very wealthy, diverse economy. I’m not sure the
structural problems in the UK are anywhere near as severe as they are
in Greece,” Colquhoun said.

“The UK is AAA. We have said that the chances of that changing are
less than 50 percent and therefore the UK remains AAA with a stable
outlook,” he added

Greece’s credit rating was cut in various stages over 2009 by Fitch to
BBB+. The rating is relatively low for a euro zone country, but still
quite high on a global scale, Colquhoun said.

One of the reasons that Greece has struggled to get its public deficit
under control is the relative strength of the euro, according to
Colquhoun. Meanwhile, the pound has seen its value fall sharply
against the euro and other currencies during 2009, which has supported
the UK’s growth outlook, he said.

European stocks declined sharply this week as investors fretted about
the outlook for sovereign debt in Greece, Portugal and other euro zone
countries. Meanwhile, bonds issued by the likes of Greece have been
hammered in the markets, making it more expensive for governments to
raise funds and leading to fears of default.

The sudden market moves have taken some investors by surprise given
that the euro zone’s debt problems have been known for some time. But
Anantha Nageswaran, chief investment officer at Bank Julius Baer,
thinks investors have been “ignoring the problem until it stares them
in the face.”

Spain could be the next country to have its debt rating downgraded and
could see a cut within the next eighteen months, José Manuel Amor from
Analistas Financieros Internacionales told CNBC


Published: via CNBC

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