Fitch maintains the Valencian debt with low approval and stable outlook

The risk rating agency Fitch has maintained

Today the rating of the long-term debt of the Comunitat Valenciana in “BBB-“, a pass approved at only one step of the “junk bond” , and has considered that it presents a “stable perspective”.

The agency has also assessed the short-term debt with a rating of “F3”, as made public this afternoon in a statement.

From Fitch have explained that they maintain the same note of approved low for the other Spanish autonomous communities, and have added that they will monitor the debate on the support of the state to the liquidity of the autonomies.

The rating of the debt in the Valencian Community is based, have detailed from the agency, in the expectations on the support of the state to the communities, and takes into account factors that contribute to improve the liquidity of the regions and reduce the probability that There is debt.

These parameters include the Budget Stability Law, among others, as well as access to state support mechanisms such as the Autonomous Liquidity Fund (FLA) and the Financial Facility Fund (FFF).

In Fitch’s opinion, the access of the Community to the FLA will continue to be insured in 2016 and 2017 for the Valencia Region.

In addition, from the rating agency have recalled that 77% of the debt with which the Community closed the year 2015 was funded through state aid mechanisms, which is a sign of the “strong support” of the central Government.

In this sense, they have considered that the Government ratified its financial support on December 23, 2014, when it “introduced more measures” to lighten the debt of the autonomous communities, including zero interest loans in 2015, bringing the interests of the debt decreased, a forecast that Fitch maintains for 2016.

Regarding the FLA

Regarding the FLA

they recalled that in the first two quarters of 2016, aid from this fund was delayed due to “political uncertainty in the central government”, although disbursements in the third and fourth quarters were “punctual”.

In addition, Fitch indicates that without the help of the central government pressure on the debt service would have been higher, since the use of funds from the State has facilitated part of the payments.

From the agency have stressed that the Valencia Region has a “weaker economic profile” than the whole of Spain, and have predicted that this weakness will be “difficult to reverse in the short and medium term, unless there is a significant change in the financing system. “

“The Comunitat Valenciana, in 2014, received 14% less financing per capita than the average of the other 14 Spanish regions under the common system, and relies on a reform of the financing system to cover this gap,” they said, if Well have qualified that the resources contributed to the Community have grown and will continue to do so in 2017.

The Fitch Agency recalls that in May 2015 a new coalition Government of the PSOE and Compromís was elected, with the support of Podemos, which has resulted in a political fragmentation with a new orientation in which social care is given priority and public health

As a forecast, the rating agency has indicated that the largest represent a large percentage of the Valencian population, “which could add pressure to Social Security and social services.”