THE Fitch ratings agency has dropped Catalonia´s status by two notches after the region´s government voted in favour of beginning a secession process from Spain.
The new rating is BB which is in “speculative” or “junk” territory and Fitch pointed to the relationship between the regional parliament and the central government in Madrid as the reason for the change in status.
Due to the fact that Spain´s national government supports Catalonia´s finances the agency has taken the decision to downgrade Catalonia´s status to a negative outlook.
“Whatever measures the central government decides to adopt, it is likely to result in increased tensions between the two governments and possible civil disruption in the region,” a Fitch statement said.
The agency added that the region would need funding in order to finance the budget deficit which is expected for 2015 and is estimated at around two per cent of regional Gross Domestic Product.
“Catalonia’s liquidity is fragile and there is uncertainty as to whether the region will continue to receive liquidity support from the central government under the same terms,” the ratings agency added.