Fitch ups Estonia

Fitch Ratings said it upgraded the Republic of Estonia's long-term foreign- and local-currency issuer default ratings to A from BBB+ and A-, respectively, and removed them from Rating Watch positive. The agency also said it upgraded its short-term foreign-currency issuer default rating to F1 from F2 and country ceiling to AAA from A+.

The outlook is stable.

The upgrades follow its formal Ecofin Council approval for Estonia's entry into the euro area, slated for Jan. 1, 2011, Fitch said.

Joining the euro area improves Estonia's risk profile as it reduces risks associated with the country's sizeable external debt and foreign-currency lending in the domestic banking system, the agency said.

Furthermore, Estonia's sound public finances and flexible economy make the country well-suited for a currency union, Fitch said.

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