MADRID (MarketWatch) -- A request by the Spanish government for additional financial support from the European Financial Stability Facility/European Stability Mechanism (ESFS/ESM) via purchases of sovereign debt in the primary or secondary market wouldn't necessarily prompt a downgrade, said Fitch Ratings on Friday.
Fitch said if sovereign bond buys by the EFSF/ESM were supported by secondary market purchases by the European Central Bank, that would greatly help cut the risk of a "self-fulfilling liquidity crisis," help the government keep its access to affordable market financing and ease pressure on Spain's sovereign ratings.
But sole reliance on policy conditional external financing would prompt a review of Spain's ratings, said Fitch.
It considers this scenario unlikely and expects Spain to make good progress towards addressing macro-financial imbalances, along with finanicial support from the ESM/ESFS and the ECB.
marketwatch.com
Fitch said if sovereign bond buys by the EFSF/ESM were supported by secondary market purchases by the European Central Bank, that would greatly help cut the risk of a "self-fulfilling liquidity crisis," help the government keep its access to affordable market financing and ease pressure on Spain's sovereign ratings.
But sole reliance on policy conditional external financing would prompt a review of Spain's ratings, said Fitch.
It considers this scenario unlikely and expects Spain to make good progress towards addressing macro-financial imbalances, along with finanicial support from the ESM/ESFS and the ECB.
marketwatch.com
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