If there’s “no light at the end of the tunnel soon,” the risk of a breakup of the 17-member single currency bloc will rise, Fitch Managing Director Ed Parker said at an event in Oslo. Policy makers are likely to continue “muddling through” and the pattern of arriving at solutions at the “last minute” is raising the cost of managing the crisis, he said.

Euro-zone leaders presented the bloc’s fourth bailout at the weekend as Spain sought as much as 100 billion euros ($125 billion) to rescue its banks. The deal was pieced together ahead of June 17 elections in Greece that may result in Europe’s most indebted nation exiting the currency bloc as anti-austerity parties rail against bailout terms.

The “key concern” remains the risk of contagion should Greece exit the euro, Parker said. While the direct impact of the nation’s departure would be small, a disorderly exit could even hurt the ratings of the euro region’s AAA rated nations, he said. There is “huge” uncertainty about the fate of Greece, Parker said.

Only four euro nations — Germany, Luxembourg, Finland and the Netherlands — still carry the top AAA credit grade at the three main ratings companies.

Third LTRO

Spain, which said June 9 there are no fiscal terms attached to its bailout, will fail to meet its budget deficit targets this year and next, Parker said, adding to a backlash against more bailout spending that is gaining traction in core countries such as Germany and Finland.

A Greek exit from the euro area would also make a third offering of three-year loans from the European Central Bank “inevitable,” Fitch Co-Head of Financial Institution Ratings James Longsdon said at the same event. More long-term liquidity support from the ECB is growing “increasingly likely,” he said.