Fitch Ratings has placed all its structured finance transactions in Greece on Rating Watch Negative (RWN) following the downgrade of the Greek sovereign ratings to 'BBB+'/ 'F2' with Negative Outlook.
The rating agency said that the sovereign downgrade will also negatively impact the performance of rated securitization transactions because the general economic outlook will remain uncertain in Greece over the short term. Expectations are for higher unemployment and consumer arrears.
Furthermore, Fitch considers that the degree of sovereign risk indicated by Greece's current ratings is no longer compatible with 'AAA' ratings in structured finance deals and signals a risk of a sovereign default. This would affect securitization tranches rated above Greece's long-term local currency Issuer Default Rating (IDR) of 'BBB+'.
The agency said it also expects that all new and most existing securitization ratings secured on collateral located in the country will be capped at the 'AA' rating category, as long as Greece's sovereign rating remains in the 'BBB' rating category.