Italy, Spain Among EU Nations Downgraded by Fitch

Fitch Ratings on Friday downgraded the sovereign credit ratings of Italy and Spain as well as Belgium, Cyprus Slovenia, indicating there is a 1-in-2 chance of further downgrades in the next two years.

In its statement, Fitch said these countries have near-term vulnerability to monetary and financial shocks.

"Consequently, these sovereigns do not, in Fitch's view, accrue the full benefits of the euro's reserve currency status," Fitch said.

Fitch cut Italy's rating to A-minus from A-plus; Spain to A from double-A minus; Belgium to double-A from double-A plus; Slovenia to A from double-A minus and Cyprus to triple-B minus from triple-B, leaving that island nation just one notch above junk status.

Ireland's rating of triple-B plus was affirmed. All of the ratings were given negative outlooks.

"Overall, today's rating actions balance the marked deterioration in the economic outlook with both the substantive policy initiatives at the national level to address macro-financial and fiscal imbalances, and the initial success of the ECB's three-year Long-Term Refinancing Operation in easing near-term sovereign and bank funding pressures," Fitch said.

Fitch's announcement follows a downgrade earlier this month by Standard & Poor's of nine euro zone countries, including Spain and Italy.