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Forced by Europe, the main rating agencies publish a schedule of their upcoming sovereign reviews. One such list can be found here.

At the end of this week, Fitch updates its assessment of Ireland and Austria. They have the outlooks of both as stable. There is some risk that Fitch cut its outlook on Austria's AAA rating to negative from stable. This would be a catch-up move as Moody's has already adopted a negative outlook of its AAA rating. According to S&P, Austria has already lost its AAA rating and it gives AA+ with a stable outlook, due to concerns about its banks two years ago.

The immediate pressure is coming Hypo Alpe bank that was nationalized in 2009 and is continuing to hemorrhage. The too-big-to-save of some European banks (contrasts to the US too-big-to-fail) is captured in Austria. If the government were to take over Hypo Alpe debt, it would boosts the sovereign debt by more than 6 percentage points of GDP to over 80%. S&P warned that such a move could trigger another ratings cut. The only way observers see that Austria can keep Hypo Alpe off its books is by getting other banks and financial institutions to acquire the risky assets. The countries' largest banks appear to be balking.

At the end of last week, Moody's cut the rating of Hypo Alpe's guaranteed senior unsecured bonds to Baa2 from A1. Recognizing that Hypo Alpe's problems weigh on its creditors, Moody's warned yesterday that Bayerische Landesbank,, Hypo's former parent, is facing capital pressure. Hypo Alpe owes it 2.3 bln euros. The government is still hoping Bayerische contributes to a publicly owned "bad bank".

While an outlook cut is the most likely action by Fitch, it is possible that the rating agency uses the opportunity to adjust its rating as well. Even if Fitch does not take away Austria's triple-A rating, Moody's is likely to do so when it announces its review on February 28.

The markets have shown little reaction to the pending decisions. Austria 10-year bonds trade near Netherlands,, which is above Germany and Finland, but below France and the EFSF. The 5-year credit default swaps are elevated for Austria at about 43 bp (up from 25 bp in mid-November) and the highest in almost a year, but still low by international standards.

Moody's is set to review Spain this week. It has a stable outlook on Spain's Baa3 rating, which is comparable to S&P BBB- rating. Even though non-performing loans as a percentage of overall bank loans is continuing to rise (13.6% at the end of 2013 from 10.4% at the end of 2012). as this chart by Dick Darlington illustrates, there is some growing confidence among investors and observers that Spain's economy has turned a corner of sort. It is unlikely that Moody's will raise its outlook at this juncture. That said, our proprietary model puts Spain at BBB+.

Source: G10 Rating Action Preview: Focus On Austria