S&P: Serbia unlikely affected

Standard & Poor's said that talks between the Serbian government and the Kosovar administration have failed to reach a compromise on the final status of Kosovo, the Serbian province populated overwhelmingly by ethnic Albanians.

The secession of Kosovo is now all but inevitable, the agency said, noting that although there is a risk that the situation between Serbia (foreign currency BB-/stable/B) and Kosovo deteriorates, the secession of Kosovo would be unlikely to undermine Serbia's sovereign creditworthiness.

"The prospect of E.U. membership for Serbia is a key policy anchor and a key driver for an orderly resolution of the Kosovo question in the coming months," S&P credit analyst Sladana Tepic said.

"Although political rhetoric in Belgrade has been quite confrontational, it is almost unimaginable that any Serb military intervention would follow Kosovo's independence. On the contrary, the loss of Kosovo may cause only a subdued reaction among Serbia's population, which has been resigned to losing the province for some time."

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