Fitch downgrades Dexia

Fitch Ratings said it downgraded Dexia Credit Local's subordinated debt to B-, along with Dexia Banque Internationale a Luxembourg's and Dexia Bank Belgium's subordinated debt to BBB-.

All of the ratings have been maintained on Rating Watch negative.

Dexia's long-term issuer default rating of A+, short-term issuer default rating of F1+, viability rating of F and stable outlook are unaffected.

Dexia Credit's long-term issuer default rating of A+, senior debt rating of A+, market-linked notes rating of A+(emr), hybrid securities rating of CC, short-term issuer default rating of F1+, commercial-paper rating of F1+ and state guaranteed debt rating of AA+ are unaffected.

Dexia Banque's long-term issuer default rating of A+, short-term issuer default rating of F1+, senior debt rating of A+, market-linked notes rating of A+emr, hybrid securities rating of CCC and state-guaranteed debt rating of AA+ were unaffected.

Dexia Bank Belgium's long-term issuer default rating of A, short-term issuer default rating of F1 and senior debt rating of A were unaffected.

The downgrades were driven by the materially heightened risk that a debt restructuring could be imposed by the European Commission as part of its 'burden sharing' concept, given that Dexia has received a second round of state aid, Fitch said.

The agency said it would consider a potential debt restructuring that would result in losses for subordinated bondholders as a distressed-debt exchange.

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