S&P cuts Baltic states’ ratings

S&P on Monday cut Latvia’s credit rating for the fourth time in a year as the country revealed its economy shrank by a fifth in the second quarter. The downgrade highlights the plight of the Baltic region amid the EU’s deepest recession. S&P cut Latvia’s sovereign rating one notch to junk status from BB+ to BB, and downgraded neighbouring Estonia to “A-”. Latvia is the only one of the three Baltic states to have so far turned to the IMF for help but Lithuania has admitted it may have to follow suit after suffering a 22.4% in second quarter GDP. More detail on FT Alphaville.