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Europe Locks Out S&P, As Rating Agency Converts All Key European Ratings To "Unsolicited"

Tyler Durden's picture





 

Yesterday we reported that instead of manipulating home price data, China would simply stop reporting it. Fast forward to today and a few thousand miles west where we get a comparable report, only this time involving an insolvent continent and a comprehension-challenged rating agency. Just released from S&P: "Following new European Union regulations on credit ratings, we are converting our issuer credit ratings on these sovereigns and the ECB to "unsolicited", as we do not have rating agreements with the rated entities. Standard & Poor's  will nonetheless continue to rate the seven sovereigns and the ECB, and classify the ratings as unsolicited, as we believe that we have access to sufficient public information of reliable quality to support our analysis and ongoing surveillance, and because we believe there is significant market interest in these unsolicited ratings. Article 10 of EU Regulation 1060/2009, which addresses matters relating to the disclosure and presentation of credit ratings, requires, among other things, that unsolicited credit ratings be identified as such." In other words, Europe just told S&P, "Go fornicate yourself. We'll continue being broke while pretending to be solvent, and don't need you to spoil the party by being occasionally truthy..."

Entities affected:

  • Kingdom of Belgium (AA+/Negative/A-1+)
  • Republic of France (AAA/Stable/A-1+)
  • Federal Republic of Germany (AAA/Stable/A-1+)
  • Republic of Italy (A+/Stable/A-1+)
  • State of The Netherlands (AAA/Stable/A-1+)
  • Swiss Confederation (Switzerland; AAA/Stable/A-1+)
  • United Kingdom (AAA/Stable/A-1+)
  • European Central Bank (AAA/Stable/A-1+)

More from the release:

Standard & Poor's has also converted its issue ratings on the debt of Belgium, France, Germany, Italy, and the U.K. to "unsolicited" and intends to withdraw these ratings on May 17, 2011. Standard & Poor's does not rate debt issued by The Netherlands or Switzerland, and the ECB has not issued any market debt to date.

This decision does not change Standard & Poor's view of the creditworthiness of the seven sovereigns and the ECB; the ratings themselves remain unchanged.

This is the first of a series of announcements resulting from the adoption of EU Regulation 1060/2009 and our approach to treating certain sovereign ratings as "unsolicited".

Standard & Poor's analysis of these sovereigns and the ECB may be based solely on publicly available information and may involve the participation of government officials. Standard & Poor's has used information from sources believed to be reliable based on standards established in our Credit Ratings Information and Data Policy, but does not guarantee the accuracy, adequacy, or completeness of any information used.

Just like last year, when in April the IMF raised its backup rescue facility by half a trillion, which prompted us to assume that the IMF was on the verge of bailing out Europe (which happened in early May after Greece went bankrupt), so this move likely indicates something very bad is coming. As for all the investment, pension and insurance funds that rely on ratings to make investment decisions, good luck.

 


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Thu, 02/17/2011 - 13:27 | Link to Comment TheGreatPonzi
TheGreatPonzi's picture

This is simply surreal.

Thu, 02/17/2011 - 13:44 | Link to Comment ivana
ivana's picture

absolutely. looking at usd vs eur weakness it seems that powerz are running out of ideas and bullets.

eur should dive down but it is somehow ressistant ... think we can expect some fin earthquake soon

Thu, 02/17/2011 - 14:48 | Link to Comment TBT or not TBT
TBT or not TBT's picture

Europe doesn't have a lot of bullets or guns to shoot them with.    Islamic fascism is surrounding them and interpenetrating them, and their own populations are aging fast, expecting to get mountains of pensions promised to them back when, in exchange for all those taxes they paid.    Short of some technological miracles decoupling productivity there, Europe is screwed.  

Thu, 02/17/2011 - 13:58 | Link to Comment jus_lite_reading
jus_lite_reading's picture

Why? This just increased the Black Swan factor by an exponent of 666.

Magic beans and snake oil, now on sale in the EU.

Thu, 02/17/2011 - 22:17 | Link to Comment Zero Govt
Zero Govt's picture

S&P couldn't see a Black Swan until it's in the rear view mirror. Trying to predict a future oncoming Black Swan the CRA's are about as useful as rose tinted spectacles!

Who gives a fuk if the CRA's are legislated away (totalitarian Big Bro EU State banned). They've AAA-Rated the clown show that is the European Bailout Fund which amounts to no money in it and a sack full of promises (shit). 

'Do Your Own Research' has always been a wise rule of thumb. After the diabolical corruption of the CRA's in all manner of dodgy ratings you've got to be a loon to need their view on anything.

If this matter shows anything it's that the EU are becoming ever more paranoid and controlling. That should be a warning sign better than any rating ever could. In fact can't you already hear alarm bells going off???   

Thu, 02/17/2011 - 22:20 | Link to Comment StychoKiller
StychoKiller's picture

Pay no attention to those children pointing out the Emperor's nakedness!!

Thu, 02/17/2011 - 13:29 | Link to Comment Ragnarok
Ragnarok's picture

OT: Al-Zayat Takes $8 Billion German Bond Claim to U.S. High Court

 

http://noir.bloomberg.com/apps/news?pid=20601087&sid=aKRejbkddJvY&pos=4

Thu, 02/17/2011 - 14:10 | Link to Comment PY-129-20
PY-129-20's picture

"A company founded by millionaire Fouad Al-Zayat is asking the U.S. Supreme Court to help it secure a payment of about $8 billion on German bonds that Adolf Hitler ordered into default 78 years ago."

Bloomberg has a "Adolf Hitler News" site - lol, this is pure madness. 78 years ago? Dude, he could've waited a bit longer for this, seriously. I am a 100 % sure that Augustus had also some Roman bonds that ordered into default...jesses ne. So ein Unfug.

Thu, 02/17/2011 - 13:29 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Now things gets exponentially more interesting.

Thu, 02/17/2011 - 13:29 | Link to Comment redpill
redpill's picture

OT, but speaking of housing, this is something I've been saying on ZeroHedge for months.... NAR OVERSTATES HOME SALES BY 20%:

http://www.inman.com/news/2011/02/15/decline-in-real-estate-sales-greater-stated

 

Thu, 02/17/2011 - 13:35 | Link to Comment cosmictrainwreck
cosmictrainwreck's picture

well, we know they all lie, but geeze, 20%?? curiouser & curiouser....

Thu, 02/17/2011 - 13:47 | Link to Comment Idiot Savant
Idiot Savant's picture

LOL, not exactly a little white lie is it. According to figures in the article, it's over 25%!

NAR's figures -- based on data collected from multiple listing services and large brokerages -- show sales of existing homes fell 5 percent in 2010, to 4.9 million. But CoreLogic, which collects public sales records from county recorders and courts, estimates that home sales actually fell 12 percent, to 3.6 million.

Thu, 02/17/2011 - 13:48 | Link to Comment Sean7k
Sean7k's picture

Nice catch Redpill. Funny how corelogic correlates to what I have been seeing for a long time. Funny how NAR numbers reflect industry bias. Why am I not surprised?

Thu, 02/17/2011 - 14:00 | Link to Comment jus_lite_reading
jus_lite_reading's picture

Say it ain't so!

I believe ZH and many of it's members have been saying this since day 1...

The best part is, homebuilders (more like home wreckers) are UP!

Thu, 02/17/2011 - 13:33 | Link to Comment George the baby...
George the baby crusher's picture

 

These are desperate measures in desperate times by desperate people.

 

Thu, 02/17/2011 - 14:02 | Link to Comment jus_lite_reading
jus_lite_reading's picture

When a key witness to a mafia crime is set to give his testimony, the mafia always makes sure, he/she is "swimming with the fishes" well before the trial...

Whoops! You mean the EU is about to implode?! Yes.

Thu, 02/17/2011 - 13:33 | Link to Comment AN0NYM0US
AN0NYM0US's picture

confirmation of a recovery from Rosenbear's Canada

 

Bombardier says 2011 orders (mostly Business Jets) point to recovery (for those who don't fly public)

http://www.theglobeandmail.com/globe-investor/bombardier-says-2011-order...

Thu, 02/17/2011 - 14:33 | Link to Comment GoinFawr
GoinFawr's picture

Either that or it points to the go ahead of the TSE takeover by London.... Vancouver billionaires will be spending a lot more time in the air if they have to fly over the pond to get deals done.

http://www.proactiveinvestors.com/companies/news/12135/tmx-group-and-lse-in-advanced-merger-talks-12135.html

I bet Harper argues that this 'merger of equals' (that gives 55% controlling interest to the 'more equal than others' Brits) will cut down gov't spending as there will be no more need for Canuckian regulators! Yay!

Oh well, I'm sure by the time this deal goes through there won't be any Cdn.s left in the market anyway...

Thu, 02/17/2011 - 13:36 | Link to Comment SayTabserb
SayTabserb's picture

But in a way, don't Europe and S&P deserve each other? Don't they belong together? I hope in time they can see this as a lovers' quarrel and get back together.

Thu, 02/17/2011 - 13:37 | Link to Comment Byte Me
Byte Me's picture

Amazing. You don't think any of these sovs might ask their local S+P reps around for a little fireside chat and just 'off' them do you?

Thu, 02/17/2011 - 13:37 | Link to Comment Jean Valjean
Jean Valjean's picture

Occasionally truthy...at best!

Thu, 02/17/2011 - 22:22 | Link to Comment Zero Govt
Zero Govt's picture

+AAA 

Thu, 02/17/2011 - 13:37 | Link to Comment Dick Darlington
Dick Darlington's picture

Governmentless Belgium saved by the bell...

Thu, 02/17/2011 - 22:23 | Link to Comment Zero Govt
Zero Govt's picture

Belgium splits into 2 independent States > cue > Creditor Clown Show of Epic Proportions ;)

Thu, 02/17/2011 - 13:38 | Link to Comment ivana
ivana's picture

!!?? pretend & extend entering twilight zone ??!!

running out of ideas?

Thu, 02/17/2011 - 13:39 | Link to Comment buzzsaw99
buzzsaw99's picture

:Crickets:

The usda prime stamp becomes worthless after over-use.

Thu, 02/17/2011 - 13:40 | Link to Comment thetruth
thetruth's picture

good for a green close

Thu, 02/17/2011 - 13:44 | Link to Comment cosmictrainwreck
cosmictrainwreck's picture

LOL....ain't that the truth?

Thu, 02/17/2011 - 13:41 | Link to Comment Dr. Gonzo
Dr. Gonzo's picture

Why not? They tell us silver is worth $31.50 when we know it's worth a lot more.

Thu, 02/17/2011 - 13:43 | Link to Comment SayTabserb
SayTabserb's picture

There's a scene in Catch-22 where Yossarian gets up in the middle of the night and moves the bomb line past a target none of the crews wants to attack because it's too dangerous. Seems to me that's all that's happening in the world's economies now: everyone is just dealing with the awful reality by trying to change the way they look at it.

Thu, 02/17/2011 - 14:05 | Link to Comment Oh regional Indian
Oh regional Indian's picture

nicely put Saytab.
Because no one can call the Emperor naked. No single or collective voice will dare call it for what it is.
Lots of distractions to dance around the core anyways.
Rates, Currencies, Commodities...like that.

We are just asleep and this is just a collective nightmare.
Not!

ORI

http://aadivaahan.wordpress.com/2011/02/16/truth-about-america-truth-abo...

Thu, 02/17/2011 - 14:53 | Link to Comment Charles Wilson
Charles Wilson's picture

Dobbs: [Over the radio] Help him! Help him!
Yossarian: Help who?
Dobbs: Help the bombardier!
Yossarian: I'm the bombardier, I'm all right.
Dobbs: Then help HIM, help HIM!

I wish I could quote the entire scene.
It might make a good quote on a tombstone for a country.

A perfect moment to bring up this book.
Thank you,

CW

Thu, 02/17/2011 - 22:25 | Link to Comment StychoKiller
StychoKiller's picture

There was only one catch and that was Catch-22, which specified that a concern for one's safety in the face of dangers that were real and immediate was the process of a rational mind.  Orr was crazy and could be grounded.  All he had to do was ask; and as soon as he did, he would no longer be crazy and would have to fly more missions.

Thu, 02/17/2011 - 13:45 | Link to Comment Cleanclog
Cleanclog's picture

WTF?  This is completely nutty now.  Logical thinking and truthful information has left the house (planet).

Thu, 02/17/2011 - 13:46 | Link to Comment Sizzurp
Sizzurp's picture

When the message isn't what you like, kill the messenger.

Thu, 02/17/2011 - 13:49 | Link to Comment Caviar Emptor
Caviar Emptor's picture

We DUn NEED No STYNKYN RaTIYngs, JanQueY!

Thu, 02/17/2011 - 13:53 | Link to Comment Shakey
Shakey's picture

Since when does the S&P tell the truth anyway?  Farce of a farce.

Thu, 02/17/2011 - 13:54 | Link to Comment cocoablini
cocoablini's picture

Listen, the SP ratings were a joke anyway. You pay someone to tell you how pretty you are?
The entire ratings system was bustified and part of the crash. So, why even bother thinking thata good rating by Fitch, SP or anyone else means anything.
We all know these countries are TOAST anyway. You know it and SP saying they are 2 steps better than toast is a waste of money

Thu, 02/17/2011 - 14:22 | Link to Comment Henry Chinaski
Henry Chinaski's picture

That's what I was thinking.  Since when were ratings agencies held in high regard around here (ZH)?

Yah, yah, I know.  It is an yet another indication of the farce. 

Thu, 02/17/2011 - 13:56 | Link to Comment vote_libertaria...
vote_libertarian_party's picture

...aaaaand stocks react with...uhhh....no reaction.

 

buy, buy, buy

Thu, 02/17/2011 - 14:11 | Link to Comment cosmictrainwreck
cosmictrainwreck's picture

yup - new highs printing at every click of the mouse

Thu, 02/17/2011 - 13:59 | Link to Comment New_Meat
New_Meat's picture

I'm wondering what effect this has on U.S. mutual funds that have European soverign debt.  Like PIMPCO that has had BUND exposure-are they compelled to dump those positions?

- Ned

Thu, 02/17/2011 - 16:37 | Link to Comment ivana
ivana's picture

good question. maybe fed and crony establishment, which cannot possibly plug all leaking holes (S&P, MBS, banks, bonds etc), are forcing funds to buy bonds?

Thu, 02/17/2011 - 14:18 | Link to Comment Translational Lift
Translational Lift's picture

Last desperate act of a failing company (sovereign)....................fire the auditor(s)............this is going to be fun to watch........

Thu, 02/17/2011 - 14:42 | Link to Comment bob_dabolina
bob_dabolina's picture

This was from June 2008. A, A, and A+

Standard and Poors sucks the fat cock.

"Credit rating agency Standard & Poor's downgraded Merrill Lynch, Lehman Brothers (NYSE: LEH - News) and Morgan Stanley (AMEX: MWD - News) - three of the credit crunch's most prominent casualties - to A, A and A+ respectively, saying their profit outlooks were weakening and more writedowns were possible."

http://us.ft.com/ftgateway/superpage.ft?news_id=fto060320081838383098

Thu, 02/17/2011 - 14:45 | Link to Comment bob_dabolina
bob_dabolina's picture


"On Sept. 7, 2008, Standard & Poor's Ratings Services affirmed its long-term

'AAA' and short-term 'A-1+' senior unsecured debt ratings on Fannie Mae and

Freddie Mac. The outlook is stable."

http://www2.standardandpoors.com/spf/pdf/events/FannieMaeFreddieMac.pdf

S&P = Stupid and Poor, Shit and Piss, Sick and Puke...whatever you like

Thu, 02/17/2011 - 14:57 | Link to Comment living on the edge
living on the edge's picture

I wondered what the S&P initials meant. Thanks 

Thu, 02/17/2011 - 22:28 | Link to Comment Zero Govt
Zero Govt's picture

Here's the Ratings for ya

AAA = junk

BBB = junk

CCC = junk

S&P = junk

Thu, 02/17/2011 - 15:56 | Link to Comment Big Ben
Big Ben's picture

Well perhaps S&P might issue more accurate ratings if it is not being paid by the issuing entity. (I say perhaps...)

It would be interesting to know what their ratings would be on the PIGS. Actually, I don't see how anyone could rate these at this point, since their ultimate fate depends on how much Germany is willing to pay to prop up the EU monetary union.

Thu, 02/17/2011 - 21:24 | Link to Comment Buck Johnson
Buck Johnson's picture

As a few have said the rating agencies are a joke anyway.  But for these nations to do what they did to an already corrupted and broke rating system, tells me that their are limits to what they can make pretty to what may be coming in the very near future to the system.  I think 2011 is the year for this whole game to start to unravel.

Thu, 02/17/2011 - 22:18 | Link to Comment PulauHantu29
PulauHantu29's picture

Since when does ANYBODY beleive ANYTHING the S&P reports or grades?

Thu, 02/17/2011 - 22:33 | Link to Comment Zero Govt
Zero Govt's picture

When the early morning newspaper tells you your AAA-Rated Bank shares have gone stone cold bankrupt and later that afternoon S&P tells you they are about to "re-adjust their AAA-rating to something a bit lower" then you can be pretty sure S&P aren't talking their usual shit

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