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INTERVIEW-Georgia rating likely cut if tension continues-Fitch

Published 05/05/2009, 08:48 AM
Updated 05/05/2009, 08:56 AM

LONDON, May 5 (Reuters) - Ratings agency Fitch is likely to cut Georgia's B+ rating if political instability continues, but other ratings in the region are not likely to be affected, a senior Fitch analyst said on Tuesday.

Georgia sent tanks to a military base near the capital Tbilisi where it said a rebellion was under way on Tuesday and accused Russia of financing a coup, a charge Moscow denies.

However, Interior Minister Vano Merabishvili later told Reuters by telephone that the rebellion was over and the commander had been arrested.

"We placed Georgia's rating on Rating Watch Negative in April and the rating will be resolved on the basis of events," Fitch's head of emerging Europe sovereigns Edward Parker told Reuters by telephone.

"If there are periods of instability, we would be likely to downgrade."

Fitch put Georgia's B+ rating on RatingWatch Negative on April 7, citing concern over rising political tensions. Debt ratings from Fitch and other agencies effectively decide how much it costs the country's government and banks to borrow.

Georgian President Mikheil Saakashvili has been under pressure domestically since losing a brief war against neighbouring Russia last August over the rebel regions of Abkhazia and South Ossetia.

Parker said there was unlikely to be any ratings impact from political tension in Georgia on other countries neighbouring Russia, such as Ukraine.

"I would not read across from events in Georgia in the last month to events in other countries," he said.

(Reporting by Carolyn Cohn; editing by Patrick Graham)

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