×
Newsmax TV & Webwww.newsmax.comFREE - In Google Play
VIEW
×
Newsmax TV & Webwww.newsmax.comFREE - On the App Store
VIEW
Tags: Fitch | Outlook | Netherlands | Debt

Fitch Cuts Outlook for Netherlands Debt Rating

Tuesday, 05 February 2013 07:24 PM

The Netherlands had the outlook on its top credit rating cut to negative by Fitch Ratings as the Dutch economy suffers from a deepening housing slump and persistent bank system woes.

The ratings company maintained the country’s grade at AAA while removing its designation as stable, according to a statement released yesterday in London. As reasons for the move, it cited the level of public debt, problems at some Dutch banks, and a property-market slump which may shave a total of 25 percent off values from their peak.

“The outlook revision to negative from stable reflects Fitch’s view that the leveraged Dutch economy has suffered a number of shocks,” it said in the statement.

Investors often ignore ratings, evidenced by the rally in Treasuries after the U.S. lost its top grade at S&P in 2011.The action by Fitch comes days after the country took control of its fourth-biggest lender, SNS Reaal NV, for 3.7 billion euros ($5 billion). While that alone isn’t enough to trigger a downgrade, Fitch said the move will add 1.6 percentage points to public debt this year, reaching a total of 74.4 percent of gross domestic product.

“The government’s multi-year fiscal consolidation plan is challenged by the difficult economic conditions,” Fitch said. “As highlighted by last week’s nationalisation” of SNS, “some banking system problems persist, with three of the four major banks having faced severe financial difficulties and needing external support since 2008.”

Fiscal Measures

Fitch said the Dutch government probably won’t adopt additional fiscal measures and it therefore expects a general government deficit of 4 percent of GDP in 2013. There are still sufficient reasons to support the current sovereign rating, Fitch said.

“The sovereign rating is underpinned by the country’s flexible, diversified, high value-added and competitive economy as well as the current account surpluses and positive net international investment position,” the ratings company said.

Yields on sovereign securities moved in the opposite direction from what ratings suggested in 53 percent of 32 upgrades, downgrades and changes in credit outlook last year, according to data compiled by Bloomberg published on Dec. 17. Investors ignored 56 percent of Moody’s Investors Service rating and outlook changes and 50 percent of those by S&P. That’s worse than the longer-term average of 47 percent, based on more than 300 changes since 1974.

--Editors: Craig Stirling, Fergal O’Brien

To contact the reporters on this story: Corina Ruhe in Amsterdam at [email protected]; Maud van Gaal in Amsterdam at [email protected]

To contact the editor responsible for this story: James Ludden at [email protected]

© Copyright 2022 Bloomberg News. All rights reserved.


FinanceNews
The Netherlands had the outlook on its top credit rating cut to negative by Fitch Ratings as the Dutch economy suffers from a deepening housing slump and persistent bank system woes.
Fitch,Outlook,Netherlands,Debt
420
2013-24-05
Tuesday, 05 February 2013 07:24 PM
Newsmax Media, Inc.

Sign up for Newsmax’s Daily Newsletter

Receive breaking news and original analysis - sent right to your inbox.

(Optional for Local News)
Privacy: We never share your email address.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.
 
Get Newsmax Text Alerts
TOP

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved
NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved