S&P Global Ratings placed Catalonia's B+/B foreign and local currency issuer credit ratings on CreditWatch with negative implications, amid escalating political tensions between Spain's central government and the autonomous region. This followed a referendum held in Catalonia on Oct. 1 on the region's independence from Spain.
The rating agency said Catalonia's ratings could be lowered one notch or more if the increasing tensions put in question the full refinancing of Catalonia's short-term debt instruments or undermine the effectiveness of the central government's financial support to Catalonia.
Catalonia has about €290 million of short-term debt due in November with refinancing requiring authorization from the central government. A further €540 million is due in January 2018, said S&P.
The ratings could be affirmed if the political tensions were to ease or if there were a clear indication that the conflict would not increase Catalonia's risk of default.
The rating agency expects to resolve the CreditWatch status of Catalonia's ratings within the next three months.
S&P affirmed Spain's ratings days before the Catalan independence referendum, saying it expects Catalonia to remain part of Spain.
S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.