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