MNI INTERVIEW: DBRS Says Spain Baseline Scenario Unchanged

--Ratings Firm to Issue Closely-Watched Review on Friday

By Jack Duffy

     PARIS (MNI) - The Canadian ratings firm DBRS has not altered its "baseline"

view of Spain following Sunday's disputed vote for independence by Catalonia,

its wealthiest region.

     "Our baseline scenario has not changed," Nicolas Fintzel, vice president of

global sovereign ratings at DBRS, told Market News International in an

interview. "Our baseline scenario is for continued unity for Spain." 

     DBRS is set to review its rating on Spain this Friday. Its current rating,

A (low) with a stable outlook, allows Spanish government debt to qualify for a

higher level of collateral, which means lower haircuts when used by banks to

borrow from the European Central Bank.

     Fintzel, who said he could not comment directly on Spain's credit rating

because of the imminence of the review, added "obviously we will see how the

situation evolves. It is very fluid."  

     Catalonian schools, business and public transport services shut down on

Tuesday in a one-day strike to protest the violence that erupted on Sunday when

police intervened to bar voters from polling stations. 

     Fintzel said the clashes could boost public support for independence and

for the regional Catalan government, making a negotiated solution with Madrid

more difficult. 

     "The baseline scenario that it would have been difficult for the current

Catalan government to renew its majority in a snap election is now being

challenged," he said.

     Fintzel said, however that the rating firm was standing by a report it

issued in August concluding that "under DBRS's most likely scenario...Spain is

expected to preserve its unity over the medium term."

     The view reflects the Madrid government's staunch opposition to Catalonia

independence, the substantial legal and institutional obstacles as well as the

"strong economic growth and the rapid reduction in unemployment both in Spain

and in Catalonia," the DBRS report said. 

--MNI Paris Bureau; tel: +33 1-42-71-55-41; email: jack.duffy@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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