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Germany’s AAA Rating Affirmed by Fitch on Budget Consolidation

Aug. 7 (Bloomberg) -- Germany’s top credit rating was affirmed by Fitch Ratings, which said Chancellor Angela Merkel’s government had beat its own budget targets and positioned Europe’s largest economy on the path to growth.

Fitch maintained Germany’s AAA rating long-term with a stable outlook and affirmed the country’s short-term foreign currency rating. The ratings company cited the country’s first budget surplus since reunification on the combined federal, state and municipal level last year. Germany’s outstanding debt as a portion of gross domestic product has “peaked,” Fitch said in a statement today.

“Germany has all the ingredients of a declining public debt path,” Fitch said. “The economy is growing, the budget position is relatively favorable and nominal interest rates are low.”

Germany has preserved its top credit rating as it’s weathered the single currency’s debt crisis on the back of exports and a stable labor market. The government is reducing the budget deficit in a bid to meet constitutional debt limits, aiming for a federal budget surplus in 2014.

Still, investors often ignore ratings, evidenced by the rally in Treasuries after the U.S. lost its top grade at Standard & Poor’s in 2011. Yields on sovereign securities moved in the opposite direction from what ratings suggested in 53 percent of 32 upgrades, downgrades and changes in credit outlook last year, according to data compiled by Bloomberg published on Dec. 17.

While the debt crisis, closing in on its fourth year, “is not yet over,” Fitch said risks posed to Germany have receded because of euro-area-wide budget rules and the European Central Bank’s promise to buy sovereign debt if countries sign up to reforms.

To contact the reporter on this story: Patrick Donahue in Berlin at

To contact the editor responsible for this story: James Hertling at

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