OREANDA-NEWS. Catalonia's regional election result is likely to sustain tension between the regional and central governments, Fitch Ratings says. The debate over independence could continue to strain co-operation between them, which would be credit negative for the Autonomous Community of Catalonia.

The pro-independence alliance Junts pel Si (JxSI) won 62 seats and the more radical left-wing Popular Unity Candidacy (CUP) 10. This makes possible a governing pro-secession coalition with a majority in Catalonia's 135-seat regional parliament.

But the vote does not necessarily increase the risk of a near-term confrontation with the central government. JxSI and CUP's combined share of the vote was below 50% and CUP has opposed Artur Mas of JxSI remaining as Catalan president. Even assuming the parties agree a joint programme, they may wait for December's general elections before pressing their case.

Nevertheless, Mas said on Sunday that the result was "a strong mandate to push ahead" with plans for secession. CUP's presence in a coalition could accelerate these plans relative to Mas's 18-month timetable. Any Catalan government's plans for secession would be fiercely opposed by Spain's central government, which may interpret the pro-independence parties' share of less than half the total vote as strengthening its case.

The co-operation between Catalonia and the central government that has seen the central government continue to provide liquidity support (as to all regions) via the Regional Liquidity Fund (FLA) may therefore come under strain. Catalonia has requested an additional EUR2.3bn from the FLA in 2015. Central government funding represented 58% of direct debt at end-2014.

This support is reflected in Catalonia's 'BBB-' rating, which is at the rating floor for all Spanish regions. We placed the rating on Rating Watch Negative (RWN) a year ago, following the region's unilateral call for a non-binding consultation on its future. We maintained the RWN in July, pending more clarity on the future relationship between the regional and central governments. What form that relationship will take will depend primarily on the approach taken by the new Catalan government.

If the floor is removed for Catalonia, we would reassess its rating based on its standalone profile. This is weaker than the 'BBB-' rating indicates, due to persistent negative operating and current balances, and high debt.

Devolution with greater fiscal autonomy could ultimately be positive for Catalonia's credit profile if it increased fiscal revenue while Catalonia continued to receive central government support.