EU's billions in defence borrowing would not spark rating downgrade, Fitch says

LONDON, March 13 (Reuters) - The European Union's plan to ramp up defence spending would lower the EU's rating headroom due to added debt, but would not by itself lead to a downgrade of the issuer's sought-after AAA credit rating, Fitch Ratings said on Thursday.

"While greater national defence expenditure could affect the ratings of 'AAA' rated member states over the medium-term, ReArm Europe would also reconfirm the EU's policy importance, which is a key rating factor," Fitch said in a statement.

Earlier this month the European Commission proposed plans to to borrow up to 150 billion euros ($157.76 billion) to lend to EU governments under a rearmament plan driven fears that Europe can no longer count on U.S. protection as Russia's war in Ukraine continues.