June 16, 2020 / 12:29 PM / 20 days ago

Europe's new coronavirus fund could support sovereign ratings - Fitch

LONDON, June 16 (Reuters) - Europe’s new coronavirus fund could support the region’s sovereign credit ratings depending on its final design, Fitch said on Tuesday.

The proposal which consists of 750 billion euros — 5.4% of EU GDP — using the European Union’s budget as a guarantee “mutualises part of the cost of the coronavirus crisis at the EU level,” the ratings firm said in a new report.

If agreed, the fund “would create a precedent and a mechanism to be replicated in future downturns and we would not be surprised if the framework became a permanent feature of the EU’s institutional arrangements.” (Reporting by Marc Jones, editing by Sinead Cruise)

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