Friday, September 23, 2011

Fitch confirms the highest score to Germany



The rating agency Fitch on Tuesday reaffirmed the "AAA" rating to Germany, and now it is the best position. The outlook remains stable on the other hand. A good report that offers the very interesting German debt investment safe haven status in these troubled times.

Speaking in a statement, Fitch highlights the following: a German economy "robust and diversified", "health" of the labor market, a macroeconomic management "prudent" investments and "vigorous". According to the agency, the prevailing market rate for the German debt if need be shown the safe haven status associated with it. However, that "the resolution of the crisis in the euro zone remains a determining factor for the stability of the German economy" notes Fitch.

"With a 40% share of German exports, 2% of GDP spent on existing support plans, and exposure of its banking sector to peripheral economies in the euro area, the risk of contagion from the crisis in Germany public debt remains high, "said Fitch, as well.

A position that echoes that of the IMF, the IMF saw as a likely scenario now possible spread of the debt crisis of the euro area financial system. "The banks' exposure to the fragile economies of the euro area is a fraction of the total, but is concentrated on a small number of institutions," said the agency also. The Landesbanken, regional public banks also remain a weak point of the German economy, Fitch believes that "an additional restructuring and consolidation is needed in this sector."

Recall that the Basel Committee refuses to recognize the present German peculiarity consists in that a large part of bank capital is composed of public hybrid capital which banks must pay interest to shareholders. Local authorities could be forced to run vast operations re-capitalization, the amount could be just "confessed" politically speaking.

For many years, observers indicate persistently that only two or three Landesbanken sufficient in Germany, instead of the seven schools being independent. But, of course, local politicians are hesitant to say the least to give up some of the prestige and economic power associated with these regional facilities.