Fitch downgrades Libya

Fitch Ratings said it downgraded Libya's long-term foreign- and local-currency issuer default ratings to BBB from BBB+ and placed them both on Rating Watch negative. The short-term foreign-currency issuer default rating also was downgraded to F3 from F2 and the country ceiling to BBB from BBB+.

The downgrade reflects the eruption of political risk evidenced by the increasing momentum of the popular uprising aimed at ending Muammar Gadhafi's 42-year rule, Fitch said.

The Rating Watch negative reflects the wide range of possible political outcomes, the agency said.

Lack of a political resolution to the conflict and escalating violence would likely result in a further downgrade, Fitch said, adding that this would especially be the case if disruption extended to Libya's oil production.

Libya's credit profile balances substantial oil and financial wealth against fragile and idiosyncratic political institutions, the agency said.

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