2013.11.0305:31:00UTC+00Fitch Upgrades Spain's Rating Outlook To 'Stable'

Fitch Ratings upgraded the outlook on Spain's sovereign credit rating to 'stable' from 'negative', saying the country's banking sector reforms have "advanced well" and that the government has made significant progress in fiscal adjustment.

Fitch rates the country's long-term foreign and local currency issuer default ratings (IDRs) and senior unsecured bond ratings at 'BBB'. The short-term foreign currency IDR has been affirmed at 'F2' and the country ceiling at 'AA'.

"The banking sector restructuring has advanced well since 2012," Fitch said in a statement over the weekend. The government has injected a total of 6 percent of GDP of state capital since the crisis began. However, the rating agency said that the risk of the system requiring state support of a similar magnitude over the medium term is low.

Financing conditions for the sovereign have improved in 2013. In addition, the authorities have made significant reforms of the labor market, pension system, fiscal framework and financial sector, Fitch said.

The agency also pointed that the economy exited recession in the second half of 2013, sooner than forecast in Fitch's previous review in February 2013. However, Fitch said, it expects Spain's economic performance to remain very weak in 2014.