The risk rating agency Fitch has raised Catalonia's solvency from one notch from “BBB-” to “BBB”, thanks to the fact that the Spanish Government's financial support for the communities is “now a structural characteristic of the institutional framework, as it has been in force for more than 10 years.” It is the second time that the agency has raised Catalonia's solvency after doing so in 2021, when it left the so-called “speculative” or colloquially “junk bond” rating.
“Fitch believes that the Spanish autonomous communities can now benefit from an improvement above the previous minimum rating of “BBB-”,” the agency reported in the note published this Wednesday that reported the change. Fitch recalls that “the high liquidity support mechanism” of the Government represents that 58% of the total debt of the Spanish regions is from the State. The agency believes that it is important that community financing measures have been consolidated taking into account that it was originally temporary.
The improvement in solvency represents another step for the Generalitat to be able to partially finance itself again in the debt markets. Although most of the public debt is in the state FLA, Councilor Natàlia Mas wants to be able to begin raising resources in the markets, as the Generalitat had always done. This plan also includes the forgiveness of part of the debt agreed with the Government.
Last December, the DBRS agency raised Catalunya to the same level as Fitch ("BBB"). And the Moody's agency has a community rating of "Ba1."
