S&P Will Downgrade France And Italy Next, CDS Implies

Tyler Durden's picture

With government bond markets increasingly manipulated directly via central-bank intervention - and becoming increasingly illiquid - the odd situation we find ourselves in once again is that CDS markets perhaps provide a 'cleaner' picture of where credit risk is actually being traded between market participants (hedgers or speculators). To wit, Bloomberg's ever-insightful Michael McDonough has noticed a significant divergence between market-implied perceptions of risk (CDS) and ratings-agencies perceptions among several nations. Most notably France and Italy (with Belgium close behind) appear considerably 'over-rated'. Italy's implied rating is equivalent to BB+ at S&P - well below its average rating of BBB+ and France's implied rating of A is around four notches below its composite rating. Spain also appears set for more pain as its market price implies a sub-investment grade rating is imminent.



On the bright side - maybe Vietnam is due for an upgrade?


Source: Bloomberg Briefs

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EscapeKey's picture

In other words, "Markets to ignore France, Italy downgrades next".

I really wish that'd be an Onion article only, and not an indicator of what a completely manipulated laughing stock the "free" markets have become.

GetZeeGold's picture



Whew....for a second there I they we're going to upgrade them. That would have totally had me screwed up.

disabledvet's picture

So what's your opinion of the Maastricht Gold Thieving Treaty Getzee? Looks like the greatest gold heist in history. Good thing Spain was smart and kept his Portuguese mistress....

Alpo for Granny's picture

Watching that scumbag shill Simon Hobbs go after Sean Egan on CNBS now. Sean is holding his own like a BOSS!!!

HoofHearted's picture

I thought the first one to downgrade Spain, Italy, (and Uncle Sugar) would be Sean Egan, the only man with a backbone in the whole credit-rating industry.
Oh yeah....FUCK YOU, S.E.C.!!!

LibertyForSome's picture

Not to mention that similar charges could likely (certainly?) be levied against the other 8 credit-rating agencies: when one agency tries to present realistic ratings for nations with double sovereign debt to GDP ratios, look  at how quickly the SEC tries to shut him up.  

Move along now, folks, nothing to see here...

asteroids's picture

Spain and Italy are a distraction. France is the real prize.

Dr. Engali's picture

Look's like Argentina is on the verge of blowing up again. One would think they might get sick of it after a while.

samcontrol's picture

Hey , what do you know about Argentina ? Really ?

It will not "blow up" , at least for now . She will lie for a couple more years and lose the next elections.
Now if she does anything to change the constitution and go for re re election a la Chavez , then she will blow up....

to be continued.

Seriously Doc, next time you mention Argentina, ask me.

sharky2003's picture

When are we up for another US downgrade? Oh wait... I forgot they got paid off...

JPM Hater001's picture

Venezuela looks right on the money.

Buy Buy Buy!!!

firstdivision's picture

To All My Valued Employees,


As most of you know our administration, Obama et al, has continued to succeed in spite of a very dismal economy. There is no question that the economy has changed for the worse and we have not seen any improvement over the past four years. In spite of all of the challenges we have faced, the good news is this: The economy doesn't currently pose a threat to your job. What does threaten your job however, me not getting re-elected. Of course, as your employer, I can't tell you whom to be honest to, and I certainly wouldn't interfere with your right to vote for whomever you choose. In fact, I encourage you to vote for whomever you think will serve your interests the best. [...]


Now, my re-election chances are falling apart and people like me who made all the right decisions and whored myself out for campaign donations, now I need bailing out. The people that overspent their paychecks suddenly feel entitled to the same luxuries that I earned and sacrificed 42 years of my life for. Yes, being the President has its benefits, but the price I've paid is steep and not without wounds. Unfortunately, the costs of running the country have gotten out of control, and let me tell you why: We are not taxing enough. We collect state taxes, federal taxes, property taxes, sales and use taxes, payroll taxes, workers compensation taxes and unemployment taxes. I even have to pretend to care to manage all these taxes. The question I have is this: Who is really stimulating your paycheck? Is it the Government that wants to get elected and cut your salary, or is it people like me who built this administration out of many campaign donation and directly employs over a bajillion people?


Obviously, our present government believes massaging the numbers is the right economic stimulus for this country. The fact is, if I deducted 50% off the unemployment rate, would you quit or you would have to stop using Goal Seek and do actual calculations? Who wants to do actual hard work? Well, that's what happens to me. [...]


Lying is at the heart of America and always has been. To restart it, you must lie, cheat, still, and try to kill competition. However, the people that can do arithmatic believe that the massaged numbers is the essential driver of the American economic engine. Nothing could be closer to the truth and this is the type of change they want.


So where am I going with all this? It's quite simple. If any new taxes are not levied on all, or my administration, as our current plans have no room for honesty in it, I will have no choice but to GTFO and leave the country. Rather than grow the fraud, I will be forced to cut back. This means fewer jobs, less benefits and certainly less opportunity for the few that profit from doing nothing social productive.


So, when you make your decision to vote, ask yourself, which candidate understands the economics of massaged numbers and who doesn't? Whose math will endanger your job? Answer those questions and you should know who might be the one capable of protecting and saving your job. While the media wants to continue our fuzzy math, I believe the "1 percenters that can do arithmatic" are bad, I'm telling you they are very bad. They expose lies when things don’t add up. If you lose your job, it won't be at the hands of the "1%"; it will be at the hands of a group of people that believe in honesty and transparency.


You see, I can no longer support a system that penalizes lying and cheating. My motivation to pimp will be destroyed, and with it, so will your opportunities. If that happens, you can find me in Kenya sitting on the ground, under a tree, retired, and with no citizens to worry about.


Signed, your boss,


Obama (and any administration that willl follow me)

BurningFuld's picture

CDS too funny! You can swap the crap around all you want but it does not change the original underlying credit risk. It is merely a way for the Banks to charge it's customers fees and thereby ROB THE BANK IN BROAD DAYLIGHT. Just felt like sharing.

fuu's picture

OT: Anyone else having ZH connectivity issues this morning?

GetZeeGold's picture



Yes.....the boys from Chicago send their regards. Pick up the phone and dial the NSA. Those cats don't screw around.

Dr. Engali's picture

Yes. The connection sucks and I can't get on from time to time. It must be a BLS attack.

BurningFuld's picture

I would reply but I'm having connectivity issues.

disabledvet's picture

Oh, yeah. Obama campaign going "full retard" this AM.

Dareconomics's picture

France is in very bad shape but continues to be a safe haven in the EZ. I guess there aren't enough assets in Germany for all those SNB euro purchases.


Dr. Engali's picture

It appears that the Hedge is having server issues. I haven't seen Tyler tweet anything for a while.

GetZeeGold's picture



Same thing seems to be happing with Jack Welsh's Twitter acount.

LULZBank's picture

They're coming... Run for the hills Bitchezz!!!

disabledvet's picture

Funny. He's wrong about the numbers btw. All Government work is considered full time employment would be my guess via a via the household survey. Hey Dem's...if that's a new Administration coming...Regime Change as it were...then they get to use the fuzzy numbers too. "And all that other illegal stuff you're doing. On you this time."

Yen Cross's picture

Yes having trouble. My smart phone works fine though. offshore servers.

fuu's picture

Sac spilled some waffle syrup on the server.

disabledvet's picture

My I phone's getting phucked with now too. Google's cloud storage can't come soon enough for Android for me and their device plays. Buying one next month actually. GET YOUR ACT TOGETHER APPLE.

SmallerGovNow2's picture

Ditto with connection problems...

Snake's picture

Aren't rating agencies and banksters one and the same?  Why believe anything they rate, up or down?

valkir's picture

I have the same problems opening zh.

valkir's picture

and strange,i can access zh easily using my phone,than my desktop.did i get some virus from 3 leter agency?

Meesohaawnee's picture

yes connectivity issues here. not just you all

Meesohaawnee's picture

ruh rho raggie. problems with crapple? is it not making 72k a minute or whatever that was

DoChenRollingBearing's picture

Some connectivity issues yes, I am from the USA as well.

evolutionx's picture

Why France? CDS F are at 102


List of CDS / Countries:



evolutionx's picture
Country Credit Default Swap 1 day 5 days Germany 50.93 +0.35 -1.58 USA 41.3 -0.51 -2.82 Japan 83.65 +0.55 -0.26 Denmark 47.51 -0.14 -2.66 UK 48.51 +0.1 -1.66 France 102.34 +0.3 -6.91 Belgium 110.71 -0.16 -9.65 Italy 319.68 -1.22 -10.32 Spain 365.01 +5 -6.33 Dubai 279.73 -3.34 -10.28
Olympia's picture

How is it possible that the European Union allows the weak states to enter the international money market and borrow the money they need without help – based on their own potentials? How is it possible that the “chain” of interests of euro can let its weak “links” exposed to outside pressuresHow is it possible for a “herd” with common interests to let each “ship” defend itself against the wolves, without help, and its general security threatened? How is it possible for Greece, which represents a minor 3% of the Eurozone’s economy, to be allowed to threaten the other 97% of that economy, due to the latter’s weakness?

The European Union should be the one borrowing from the national banking system – thus dealing with profiteers itself based on its overall potential – not its weak “links” alone. The latter should be under the EU’s protection and constant monitoring. They should borrow from it at a subsequent time and if they became victims of profiteering, the problem should be kept in the bosom of the euro. Domestic profiteering should bring profits to Europe’s influentials, therefore bring profits in the euro area, and not threaten it.

From the Wall Street Crash of 1929 to the Global Financial Crisis of 2007




Authored by Panagiotis Traianou

disabledvet's picture

This is an excellent comment/query actually. One without an easy answer either. My argument is based on an "historical paradigm"...questions relative to "trust" and money. Would you trust an Italian Bank? How about a Greek one? How about a Swiss (yeeessssss....very much, yes?) the ECB simply has no answer for this....other than "Frankfort" of course...which has been disastrous for Greece of course...but will probably be far worse for Italy and France. Spain is interesting because of Portugal. Very clever these Spaniards...they don't just sign on to "yet another European project." The last one they tried to convince was named Franco...and he "no thanks." Might have been a mistake tho...the USA said "yes" and got "Operation Overlord."