Fitch revises Macedonia to negative

Fitch Ratings said it revised the outlooks on Macedonia's long-term foreign- and local-currency issuer default ratings to negative from stable and affirmed them at BB+.

The issue ratings on Macedonia's senior unsecured foreign- and local-currency bonds were also affirmed at BB+, along with the country ceiling at BBB- and the short-term foreign currency issuer default rating at B.

Fitch said that risks to political stability have increased this year as Macedonia has been hit by two major political shocks, which could also have spillover effects onto the economy. Revelations of and from an alleged illegal wiretap program triggered demonstrations and hardened political polarization in the country, which has seen the main opposition party boycott parliament since elections in April 2014; and in May a fire-fight in the town of Kumanovo between police and heavily armed ethnic Albanians left 18 dead.

Although an agreement in July by the main political parties, brokered by European Commissioner Johannes Hahn, provides a road map for easing tensions, implementation risks are significant and events have revealed that governance is weaker than previously believed, the agency said.

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