Fitch downgrades Finland, bonds to AA+

Fitch Ratings said it downgraded Finland's long-term foreign and local currency issuer default ratings to AA+ from AAA.

The outlooks are stable.

The issue ratings on Finland's senior unsecured foreign and local currency bonds were also downgraded to AA+ from AAA.

The country ceiling and the short-term foreign-currency issuer default rating were affirmed at AAA and F1+, respectively.

Economic performance remains weak, with 2015 GDP expanding by 0.4% (the lowest growth rate in the European Union with the exception of Greece) and no strong evidence of a meaningful pick-up in potential growth from 1.0%-1.2% over the medium-term, resulting in continuing weak public debt dynamics, Fitch said.

Although some demand components saw a modest recovery in 2015, investment continued to contract in annual terms, highlighting still weak prospects for key sectors.

In the agency’s view, key macro-economic and public debt metrics are no longer consistent with Finland retaining an AAA rating, particularly given the economy's relatively small size and the vulnerability to idiosyncratic shocks that has been evidenced in recent years.

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