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And Spain... Fitch Downgrades Spain To Aa- From Aa+, Two Notch Cut, Outlook Negative
Really close to France now...
FITCH DOWNGRADES SPAIN TO 'AA-'; OUTLOOK NEGATIVE
Fitch Ratings-London-07 October 2011: Fitch Ratings has downgraded Spain's Long-term foreign and local currency Issuer Default Ratings (IDRs) to 'AA-' from 'AA+'. The rating Outlook is Negative. Fitch has simultaneously affirmed Spain's Short-term rating at 'F1+' and the Country Ceiling at 'AAA'.
The downgrade primarily reflects two factors: the intensification of the euro area crisis and secondly, risks to the fiscal consolidation effort arising from the budgetary performance of some regions and downward revision by Fitch of Spain's medium-term growth prospects.
As Fitch has previously cautioned, a credible and comprehensive solution to the crisis is politically and technically complex and will take time to put in place and to earn the trust of investors. In the meantime, the crisis has adversely impacted financial stability and growth prospects across the region. However, the still sizeable structural budget deficit, high level of net (although not
gross) external debt and the fragility of the economic recovery as the process of deleveraging and rebalancing continues render Spain especially vulnerable to such an external shock.
While gross external debt (169% of GDP in 2010) is not high by euro area comparison, the net external debt of the economy (91% of GDP in 2010) is one of the highest in the world, reflecting a relative lack of Spanish foreign financial assets. This leaves the Spanish external finances sensitive to interest rate increases. While the current account adjustment has been significant, falling from 10% of GDP in 2007 to 4.5% of GDP in 2010 and a forecast 3.2% in 2011, further adjustment over the medium is necessary to improve the external balance sheet.
The intensification of the euro area crisis was identified as a negative rating trigger on 4 March 2011 when Spain's rating Outlook was revised to Negative.
With large fiscal and external financing needs, heightened volatility has adversely impacted market financing conditions for Spain as illustrated by the Eurosystem's intervention in the secondary market. However, Spain's 'AA-' rating incorporates Fitch's judgement that as a solvent and systemically important sovereign, in extremis, the ECB and/or EFSF/IMF will provide support to prevent a self-fulfilling liquidity crisis.
The second principal driver of the downgrade of Spain's sovereign ratings is the budgetary performance of some regional governments, which in Fitch's opinion, poses a risk to fiscal consolidation. In September 2011, the agency downgraded five autonomous communities and maintains a Negative Outlook on the sector reflecting the still difficult fiscal and economic environment and the execution risks in implementing some of the cost cutting measures announced. While the sub-national sector's debt was only 11.1% of GDP in 2010, it accounts for roughly one-third of total expenditure, making it a vital part of the necessary correction in the public finances to restore confidence and public debt sustainability.
The process of rebalancing the Spanish economy is well underway but is not yet complete and Fitch expects it to weigh more heavily on economic growth over the medium term. The agency projects annual economic growth to remain below 2% through to 2015 and unemployment to remain high. Despite the important measures already adopted by the government, further structural reform will be necessary to further enhance the competitiveness and productivity of the economy. The fundamental weakness of the labour market, as underscored by an unemployment rate in excess of 20%, is a material rating weakness relative to European and high-grade peers. Nonetheless, while the recovery over the medium term will be lacklustre, Fitch expects the long-term (ie, post-2015) potential growth rate to exceed the average for the euro area as a whole.
Despite the weakened risk profile, Fitch views Spanish sovereign solvency as secure. Under the agency's baseline scenario, the debt to GDP ratio will peak at 72% of GDP in 2013, well below the forecast euro area average of 89% in 2013.
Spain's 'AA-' rating reflects strong fundamentals: a diversified, high-value-added economy and strong governance. The government's policy response has been credible and aggressive.
The Negative Outlook reflects the risks associated with a further intensification of the euro area financial crisis, as well as possible material fiscal slippage and to a lesser extent contingent liabilities from the financial sector. A material deviation from the government's fiscal targets and failure to stabilise the government debt to GDP ratio from 2013 would place negative pressure on the rating. Substantial progress has been made in the restructuring of the banking sector and Fitch has not revised its estimate of the ultimate fiscal cost which is moderate and is consistent with the current rating.
The amount disbursed by the Fund for Orderly Bank Restructuring (FROB) is estimated at EUR17.3bn by end-2011. Under Fitch's baseline scenario, Fitch assumes that a further EUR30bn (2.8% of GDP) of capital is required from 2012 based on the agency's stress-test exercise. This is to cover additional losses while maintaining a strong core capital ratio of 10% for the system. Fitch views the costs as manageable. Should recapitalisation costs be significantly higher than this figure, the rating could move into the 'A'-range.
On a wide range of economic and fiscal indicators Spain has underlying fundamentals consistent with maintaining its sovereign rating in the 'AA'
category. Success in meeting its fiscal targets and progress on structural reform that would further enhance competitiveness and growth prospects would stabilise the rating, as would resolution of the euro area crisis.
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When is Bitch gonna downgrade the USA?
Who will it be first? Bitch or Moan?
last bubble standing will fall the hardest
China or USA?
US Treasuries.
In America, UST treasure you!
Haha
10-years have moved from 1.72 to 2.12 in the space of 3 days. One would imagine to see some margin hikes somewhere with that kind of volatility (and I don't mean in precious metals, although, that's probably where they'll end up hiking...)
Oh I forgot. UST's are "rubberstamped" ponzinvestment assets.
I'm trying to figure out how the US Dollar is a derivative of the US Treasury note particularly the 30yr.
Any takers? Is this kinda right?
Someone else said this and its been floating around up there for awhile.
Maybe not the last, but the biggest bubble will be The Petrol Dollar. When it pops there will be a mushroom cloud, or several.
What the F#@k I thought treasuries and the dollar are safe havens. When the masses finally realize they have to own gold and silver(which is money) you won't be able to get it. So you better load up now while it's on sale courtesy of the federal reserve because this could happen overnight.
When this came out I never bothered to watch it (young guy doing young things). But after watching this clip stuff inside is so connected to today and what is happening. Rollover may be a sign of things to come and alot worse. Because this time we are hundreds of times more indebted (both personal and country) in this country and all the others. And what may or will happen will be a world war for resources.
There are several bubbles: Aussie, Canadian, China housing. Western world treasuries led by US and Japan.
Isn't Fitch French? You really think they'll cut the branch they are sitting on?
A financial concern does not have a "country" of origin. lol.
Fritch is Fench, of course
Crap, I just went all in Spanish bonds with my life savings. I am terrible at market timing.
The DJIA is moving down on the news of Spain, but ignored Italy?
WTF is going on?
They must want to do some more distribution before close today.
These is no causation. The "market" responds only to rumors not events.
CLWR getting smoked like a crack rock in Cramer's dressing room.
haha! so that's why his eyes bug out!
spain? here they are playing w/ anders fogh rasmussen's and leon panetta's toys in NATO's mediterranean Spain to Host Naval Ships for NATO Missile Shield
Zapatero, BiCheZ!
The Fund for Orderly Bank Restructuring....'FROB'....wait the acronym doesnt even match the words! Thats cheating.
"the debt to GDP ratio will peak at 72% of GDP in 2013, well below the forecast euro area average of 89% in 2013."
actually by 2013 the debt to gdp should be about 0%, as there will be no more debt, and no more gdp!!!!!!
spains net foreign debt is over a trillion euros!!!
http://globaleconomicanalysis.blogspot.com/2011/10/spains-net-foreign-debt-exceeds-one.html
And right now the US debt/GDP ratio is FAR worse at almost 100%, and thats being VERY generous with the US purported $15 trillion GDP...we have nothing close to a $15 trillion GDP today.
United States is KING PONZI. It is being used to bring down all of the government on this planet, primarily CHINA; U.S. will be the last to default (if at all) - you heard it here first, bitchez.
Franz nexxt, the second ESFS passes. AUSTERITY, bitchez.
Gold and silver are getting slammed again by the criminals.
** BREAKING **
France upgraded from Cowardly- to Cowardly+, outlook froggish.
By whom exactly?
The Tin Men... thats a hint
Poor Eric King
What is he going to say this weekend?
"With gold and silver getting hammered again along with stocks on news of another sovereign debt downgrade, today King World News interviewed four decade veteran, John Hathaway, the prolific manager of the Tocqueville Gold Fund....."
"John, you might want to tell the KWN listeners globally about why the HUI is hands down one of the worst performing sectors of 2011 amidst world record budget deficits, financial turmoil, and contagion infecting all asset classes....."
+1 LOL that shit's hilarious RT.
You mean: "With gold and silver still consolidating... Here's Tom with the weather."
Gold will not see a 1 handle again after Q1 2012.
I was just about to invest in Spain but now it has been downgraded maybe i shold not what does everyone think, I mean it makes all the difference.
To allay your fears, I will act as proxy and custodian to your investment in Spain. Send me your money and in return I will send you nicely detailed quarterly reports which make you feel that you're invested in Spain.
Guess Italy was just to grease up the slide...
Everything we have gone through over the past 3 years is so bond holders NEVER have to take a haircut on anything, EVER. Seems reasonable.
what's the matter with Goldman Sachs ?
their shareprice has gone all shitty ...
Grease pump failure ?
...already heading to their private island ahead of WWIII.
Portugal may follow too. Greeks will have a friend soon.
To sum up the racket rating agency attack on Europe lately:
Moody’s downgrades 12 U.K. lenders
Moody’s downgrades Portuguese banks
Moody’s downgrades ratings on Italian banks
Moody’s downgrades Italy’s bond rating
European Nations Face Downgrade, Moody’s Says
Fitch Downgrades Spain To Aa- From Aa+, Two Notch Cut, Outlook Negative
Fitch Downgrades Italy To A+, Outlook Negative
Kind of like greasing the floor under France and Germany. One slip and the ratings down the drain.
Sounds like it should be positive for the running of the Bulls.
Bullish for running of the banks...
Lets see rating agencies are lying, banks are lying, governments are lying, my soon to be ex-wife is lying. The Euro will crash, the dollar will crash... crap all currencies will crash. Shit, its Friday... drinks are on me. Beer, shots of Limoncello and Medivka for the all you Zerohedge rascals.
tyler is jager'd out, so this will be perfect for him to ease into friday afternoon
wonderful!
get everybody well-started and start a fight, ok?
Oh, by the way I will be paying for the drinks by way of a third party check drawn on a closed Bank of America account. Enjoy!
The rating agencies will drop everyone else a few levels so they can then take down the U.S. This will continue until we are the last of the A-rated countries.
They should downgrade gold for tanking when it is suppose to go up during these downgrades
Fitch is just hittin'em out of the ball park... 2 for 3 with a pair of homers and 5 rbi's...
Does Euro-Trash Even Understand How to Play Baseball?
Euro-land better pitch around Fitch next at bat...
I've switched to Mandarin from Espanol lessons. It's the future.
...someone pulled the Spain card, wow.
Not so quiet on the western front.
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