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Fitch Continues Greek Scorched Earth Campaign: Downgrades 3 Greek Banks Covered Bonds, Puts On Rating Watch Negative
The Fitch full court press on Greece continues, now downgrading the Covered Bonds of the National Bank Of Greece from AA to A+, as well as those of Alpha and Marfin Egnatia Bank. Moody's is still evaluating whether the best time to come out with its AAAAA++*** upgrade is just before Buffett sells his entire stake, or just after. In the meantime, the Greek depositor bank run is certainly [not] getting much better. You decide.
FITCH DOWNGRADES 3 GREEK BANKS' COVERED BONDS; PLACES ON RATING WATCH NEGATIVE
Fitch Ratings-London/Frankfurt-12 April 2010: Fitch Ratings has today downgraded the following mortgage covered bonds issued by the National Bank of Greece (NBG), Alpha Covered Bonds Plc and Marfin Egnatia Bank:
NBG's mortgage covered bonds: downgraded to 'A+' from 'AA'; placed on Rating Watch Negative (RWN)
Alpha Covered Bonds Plc's mortgage covered bonds: downgraded to 'AA-' from 'AA+'; remain on RWN
Marfin Egnatia Bank's mortgage covered bonds: downgraded to 'AA-' from 'AA'; placed on RWN
The three covered bond programmes represent EUR8.5bn of rated debt.
The rating actions follow Fitch's downgrade of the Hellenic Republic's Long-term Issuer Default Rating (IDR) to 'BBB-', and the subsequent downgrades of NBG's and Alpha Bank's Long-term IDRs to 'BBB-'/RWN on 9 April 2010. (For further information, please see the following comments: "Fitch Downgrades Greece to 'BBB-'; Outlook Negative" dated 9 April 2010; and "Fitch Downgrades Major Greek Banks; Places Them On Watch Negative" dated 9 April 2010. Both comments are available at www.fitchratings.com.)
NBG's covered bond rating is based on the issuer's Long-term IDR of 'BBB-'/RWN, and a Discontinuity Factor (D-Factor) of 25.3%, the combination of which enables the mortgage covered bonds to be rated as high as 'A-' on a probability of default (PD) basis, provided overcollateralization (OC) is sufficient to sustain the corresponding stress scenario. The agency found the current asset percentage of 68.8% to be sufficient to withstand stresses in a 'A-' rating scenario and to provide outstanding recoveries in a 'A+' scenario, supporting a two-notch uplift to 'A+' of the covered bonds rating.
Following the downgrade of the Hellenic Republic, the covered bond ratings of Alpha Covered Bonds and Marfin Egnatia are capped at 'AA-', six notches above the rating of the Sovereign as explained in Fitch's 23 February 2010 comment, "Fitch Downgrades 3 Greek Banks' Covered Bonds; Remain on RWN".
Fitch is reviewing the systemic implications of the further downgrade of the Greek sovereign and issuing banks on the D-Factors of the Greek Covered Bonds' programmes and in particular on the liquidity gap score of the D-Factors. As a consequence, all three Greek covered bond programmes are placed on RWN to reflect a potential worsening of the D-Factor scores. Fitch placed the rating of Alpha Covered Bonds on RWN on 23 February 2010 pending the implementation of the agency's updated Greek RMBS criteria and Greek refinancing cost assumptions.
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We got your alpha covered with our d-factors.
Clearly Fitch didn't get the weekend memo. Will someone please update the fax and e-mail list?
Is Fitch more buy side oriented a la Egan Jones? or is it a part of the whore trifecta along with S&P and Moody's? I totally forgot, since they've been so useless these days.
Remarkable how they could not manage to find the downgrade lever for California, or so many US financials even when they were on their last swirl around the bowl.
Just goes to show alot of banks/hedge funds were caught short on your side of the Atlantic. They were even contemlating a down-day in the markets to cover their shorts - would you believe!
Which side of "your side of the Atlantic" are you referring to?
Fuck Fitch, they are proving to me that once again they are on the take from big US speculators. Long Greece/ short Fitch!
Fuck Moody's , S&P and Fitch
so you are really long bailout / short Fitch. given the bailout track record, odds are high that Greece is AIG, Fannie, Freddie or Bear but not Lehman.
with CNBC now picking up on the strategic default/consumer spending relationship it is only a matter of time.
http://www.cnbc.com/id/36422316
Bank of America clearly knows it is being abused by its borrowers as they have stated that foreclosures will rise 600% this year versus last year.
http://www.calculatedriskblog.com/2010/04/report-bofa-to-increase-foreclosures.html
soon, we will have politicians scolding citizens for being irresponsible aka strategic defaults (the ultimate irony really).
Home-equity loans or 2nd lien portfolios
C: 49B
BAC: 138B
WFC: 123B
JPM: 101B
total of big banks: 411B
approx total all banks: 978B
together, the big banks account for nearly half (42%)of the 2nd mortgages existing in the US. the portion of these portfolios that are junior liens is very high ~80%. in any bubble areas, because of the home price depreciation the value of these loans is probably zero. keep in mind though that these loans are "recourse" which means the banks can go after the assets of the borrowers (which means consumer spending is in real trouble when that occurs).
don't believe anyone who says the banks are done with writedowns. we still have a potential for hundreds of billions in writedowns from 2nd mortgages alone over the next few years.
barney frank is having a hearing tomorrow on the issue of banks writing down the value of 2nd mortgages.
http://www.bloomberg.com/apps/news?pid=20601010&sid=aYyC7r7E8N3M
I'm short Fitch, Greece, and Leo K.
you meanie. Leo's already naked shorting himself.
Is Moody's going to do anything or are they just spinning in their office chairs? How can Fitch be the only one who's actually going to do anything on this...amazing.
I wonder what Fitch's rating will be on tomorrow's Greek bonds...
Greece needs to raise 11.6 billion euros by the end of May.
They are going to revised their "Sovereign Public Finance" rating methodology: "... to take into accounts of CDS gunners, basis trade chasers and ZH bloggers, outstripping other net effects ... " to add a few notches to make them IG with NEG Outlook so they could have an excuse to revised their methodology again down the road within a few months to downgrade them once again below IG to "...comply with overall economic environment and global appetite on sovereign risks associated with Hellenic Republic ..."
Fitch as already lowered Greece’s creditworthiness to the lowest IG avaiable.
How are the bonds going to have a higher rating?
Greece MUST submit to the IMF or prepare to get slaughtered. EU slapstop was toward the USA, imho.
German ants work while Greek grasshoppers play and drink ouzo. Key is to hang out and party with the Greeks, but drive a German car.
I still don't see how this is really a "fix," or how it gets done. But I guess they have their own Paulsonian bazookas over there and threats of empty ATMs and martial lawto make all these Euro members sign on the dotted line.
Now, who's next?
This is a myth. Greeks and italians are among the world's hardest workers:
Please get your facts straight before you post nonsense, propagating myths of the lazy Greeks and southern Europeans.
Leo,
Posting an excerpt from Forbes is also propagating myths. Only it's official myth and thus much more trustworthy.
Self employment has varying degrees of hard work, just as a salaried position does. Bigtime debate fail.
Ned, I understand the frustration but blaming Greek citizens and labelled them as "grasshoppers" ain't going to solve anything; every nations have their talents and "ants".
LOL
So says Little Bo Peep the sheeple. Are you calling the kettle/pot black? :>)
Downgrading Greek banks before the bond issuance tomorrow tells me one of two things. Either Fitch is acting tough to show that they are willing to make the hard choices (if your a small country they will trump you, but if your the US and/or California or any of th states, they will ignore you or not downgrade you), or somebody or something is gaming the system to get the most out of there problems. I wouldn't be surprised if its not a little of them both. You would have to be a moron to buy debt from Greece when it's in flux to run to the IMF and/or the EU to bail itself out. I would keep away until I know for sure what the bailout plan is, what is all the particulars and how is it getting applied to the country.
http://www.allenovery.com/AOWEB/AreasOfExpertise/Editorial.aspx?contentTypeID=1&contentSubTypeID=7944&itemID=49910&aofeID=309&practiceID=349&prefLangID=410