Scenario: Euro-Zone Default Stress for Corporates - Fitch Research

Scenario: Euro-Zone Default Stress for Corporates

12 pages (6912 words) — Published Jul 22, 2011
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Brief Excerpt:

...Euro Exit is Worst Case ¡ By Far: In a hypothetical analysis of a euro-zone sovereign default, rated corporates display resilience to orderly and disorderly restructurings within the euro, but this resilience is heavily impaired by any future decision to exit the euro. Diversification Helps: Diversification away from the domestic market is a key support for ratings under all of these pressured scenarios. Evidence from prior crises has shown, however, that the capital controls which would be a necessary element of any euro exit have very broad capacity to disrupt corporate debt service in that "worst case" scenario. Today's Highest Rated Don't Always Perform Best: Critically, current ratings are assigned to incorporate the issuers' vulnerabilities to largely corporate-related issues ¡ competitive dynamics, strategic profile, financial policy relative to peers and liquidity under normal market conditions. There is some correlation with the general economic health of the sovereign. However...

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Special Report

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Fitch Research. "Scenario: Euro-Zone Default Stress for Corporates" Jul 22, 2011. Alacra Store. Mar 03, 2015. <>
Fitch Research. (). Scenario: Euro-Zone Default Stress for Corporates Jul 22, 2011. New York, NY: Alacra Store. Retrieved Mar 03, 2015 from <>
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