Spain’s debt rating was cut to one level above junk by Standard & Poor’s, which cited euro-region peers’ backtracking on a pledge to severe the link between the sovereign and its banks as it considers a second bailout. The country was lowered two levels to BBB- from BBB+, New York-based S&P said in a statement yesterday. S&P assigned a negative outlook to the nation’s long-term rating and lowered the short-term sovereign level to A-3 from A-2.
The downgrade comes after Spain announced a fifth austerity package in less than a year and published details about stress tests of its banks. Creditworthiness concerns have grown since the government requested as much as 100 billion euros ($129 billion) in European Union aid in June to shore up its lenders and amid signals that the deficit target is in jeopardy.
Spain’s credit rating downgrade was necessary because of a deepening recession and the uphill battle the country faces in pushing through an unpopular reform program, Moritz Kraemar, managing director for European Sovereign Ratings at Standard & Poor’s told CNBC Thursday. S&P cut Spain’s credit rating to just one notch above junk late or BBB-minus on Wednesday with a negative outlook — the third cut this year — as the embattled country tries to fight off growing calls for a bailout. Spain expressed surprise at the downgrade claiming it was “unhelpful.”“Politically and socially the reform agenda is very difficult. This recession could keepunemployment up and intensify the social discontent and friction between Madrid and the regional governments,” he said.
Query: Why has this taken so long?
Let's do this by the numbers...
Monday, 08 February 2010: I warned of the undeniable storm that was the Pan-European Sovereign Debt Crisis, with a specific note on Spain simply being a bigger Greece!!! This was TWO AND A HALF YEARS AGO!
Let's peruse the first four pages of the report from issued to BoomBustBlog subscribers two years ago to see if this last minute downgrade to effectively junk could have been expedited or foreseen...
To begin with, the Spanish Government BS numbers have simply been TOO OPTIMISTIC!!!
Spain public finances projections 033010 Page 01
The IMF, EU and the rating agencies forecasts have simply been Bullshit, from beginning to end!!!
Spain public finances projections 033010 Page 02
Spain public finances projections 033010 Page 03
Spain public finances projections 033010 Page 04
To prevent this post from getting too long, I will post the rest of this nearly three year report in my next rant on this topic. Note how this aged document has been more accurate than the rating agencies reports of today... Hmmm!!!!!