Fitch: Latvia off watch

Fitch Ratings said it has removed the rating watch negative on the Republic of Latvia's sovereign ratings.

The agency has simultaneously affirmed Latvia's long-term foreign currency issuer default rating at BBB-, long-term local currency issuer default rating at BBB, short-term foreign currency issuer default rating at F3 and Country Ceiling at A-, the agency said.

The outlook is negative.

"The announcement of a €7.5 billion international financial support package for Latvia mitigates the immediate risk of a currency crisis which would have led to further rating downgrades," said Eral Yilmaz, associate director in Fitch's sovereigns group.

"Nevertheless, there are still significant downside risks for Latvia such as uncertainty over its economic adjustment path, including the extent of the recession, and its impact on the public finances and bank asset quality, and also the restoration of external competitiveness, which are reflected in the negative outlook on its sovereign ratings."

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