Fitch lowers Baltic nations

Fitch Ratings said it downgraded the ratings of Estonia, Latvia and Lithuania and changed their outlooks to negative.

The agency lowered Estonia's long-term foreign-currency issuer default rating to BBB+ from A-, long-term local-currency issuer default rating to A- from A, short-term foreign-currency issuer default rating to F2 from F1 and country ceiling to A+ from AA-.

Fitch downgraded Latvia's long-term foreign-currency issuer default rating to BB+ from BBB-, long-term local-currency issuer default rating to BBB- from BBB, short-term foreign-currency issuer default rating to B from F3 and country ceiling to BBB from A-.

The agency lowered Lithuania's long-term foreign-currency issuer default rating to BBB from BBB+, long-term local-currency issuer default rating to BBB+ from A-, short-term foreign-currency issuer default rating to F3 from F2 and country ceiling to A from A+.

The downgrade of Latvia's ratings reflects the deterioration in the prospects for the Latvian economy and elevated risk of policy slippage since the agreement of the €7.5 billion loan package with the International Monetary Fund, European Union and other international lenders in December, Fitch said.

The agency said the downgrade of Estonia's and Lithuania's ratings reflects the deterioration in economic prospects, which will increase pressure on their macroeconomic policy frameworks, and their vulnerability to negative developments in Latvia, where risks have increased, through three channels: trade, common ownership of the banking system and resident confidence in local currencies and the banking system.

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