Egan Jones Cuts Spain Again: From BB- To B, Outlook Negative

Tyler Durden's picture

The little rating agency (or is that former, now that it is public knowledge that Egan-Jones missed a comma in their NRSRO application?) that just refuses to go away, has done it again, and downgraded Spain from BB- to B (negative outlook of course), and on the edge of the dreaded triple hooks, mere days after it cut it from BB+ to BB-.

Spain contnues to be weakened by the government deficit of 9.6% (based on the first quarter results), an estimated decline in GDP of 1.7% (per the Economy Ministry), the 24.4% unemployment, the IIF's recent estimate of additional bank loan losses up to EUR260B, and possible depositor withdrawals. (Over the past three fiscal years, that is from 2008 to 2010, Spain's GDP declined from EUR1.09 trillion to EUR1.07 trillion.) Meanwhile, its debt mushroomed from EUR381B to EUR563B. The recently-reported quarters are of little comfort since the debt has risen to EUR 641B while GDP has been more or less flat resulting in a 67% debt to  GDP as of 2010 (near 88% currently) and are rising. Social benefits are a major problem; while payments to the govt have been more or less flat over the past four years (up EUR 8 billion), payments from the government have been up EUR 44B). As a result, Spain is short about EUR50B per year for social payments, EUR20B per year for interest, and an additional EUR 30B for asset  growth; hence the EUR100B per annum increase in debt.


Spain will inevitably be faced with payments to support a portion its banking sector and for its weaker provinces. Assets of Spain's largest two banks exceed its GDP. We are slipping our rating to "B"; watch for more requests for support from the banks and money creation.

As explained repeatedly before, once the other rating agencies follow suit, two of which still have it at A, Spanish repo requirements at the ECB crank up by another 5%.

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tu-ne-cede-malis's picture

"Truth is treason in the empire of lies." - Ron Paul


Keep it comin, Egan and crew.

Oh regional Indian's picture

It's been long known to some of us that Greece is merely a side-show (very real, but a side-show none-the-less).

Spain, then France.

Everyone keep their eyes on France next.

Spain will be France's side-show... On and on like that.... dominoes...



idea_hamster's picture

Gold getting the monkey hammer -- WTF!?

GMadScientist's picture

"Collateral" damage...enjoy the firesale prices while there's still inventory.


Meanwhile, paper AG and AU getting raided......again.

Nobody For President's picture

Ori: you said:

Spain, then France.

Almost - Portugal, then Spain, then France.

Side bet?

LawsofPhysics's picture

LMFAO!!!  Downgrade everyone to fucking "Z" already.  What a joke these paper-pushers are.  Wake up people, by the time these idiots are telling you what is or isn't a bad investment, it is way too late.

Mark123's picture

Exactly....well said!


Of course they are so imersed in the system that they can only see the relative value of all the paper crap they rate.  What is AAA after all....just the least crooked person in a high security prison.  Is Obama a AAA politician?

tocointhephrase's picture

 Is Obama a AAA politician?


Who are you trying to compare him with?

MoreNails's picture

Sure, help your Europe-shorting buddies some more.

Joe The Plumber's picture


Egan Jones is just the messenger

Spain wrote the message

Dr. Engali's picture

Damn that Egan Jones. The SEC better start an investigation into their company. Integrity is not allowed in the new world order.

prains's picture

i downgraded spains food to shit years ago, here's to eating dogs when the spainish SHTF

Conman's picture

If Egan Jones has any Madrid offices they need to fire up the shredder asap before la policia come a bargin.

surf0766's picture

Everything higher on hope rally number 821. Please pass the Quaaludes.

GMadScientist's picture

"I said I wish I had some 'ludes"

Dr. Engali's picture

Slam down on gold right on que.

Snakeeyes's picture

Even better, Spain wants to guarantee Catalonia debt!


Catalonia? California? Bailout kings of the Spanish world?

defn8Dog's picture

Next:  "Sean Egan Arrested on Indonesian Drug Charges - Extradition Requested"

GMadScientist's picture

"Jane says she's goin' away to Spain...when...she gets her money saved...gonna start to-mor-row...."


Overfed's picture

I would have waited a day to buy more silver had I known they were gonna hammer the price down today. :-(

Guess I'll have to go buy some today, too. :-)

tocointhephrase's picture

Looks you like you bought well once and you are likely to buy well twice ;)

q99x2's picture

I don't ever remember buying anything from Spain ever. They had antiques or sunken ships or something. Got it. It was a National Geographic video that showed Spainards trying to swim across a south American river while they were carrying lots of stolen gold. The next scene was a bunch of bones in armor under the water.

Yen Cross's picture

 Look at all the equity/commodity charts from the 22nd. That's when " Egan Junk" dropped their last tape bomb at exactly the same time. They blew the trade out for a couple of days. Why everyone over reacts to that little crapola ratings agency is beyond me.

Joe The Plumber's picture

The market is full of fear and is being lied to by the banks and politicians. If you say " boo" the market has a panic attack.

The solution is not less talk. The solution is less lies

ebworthen's picture

"If only they would keep the ratings up everything would be fine."

More Lehman/Bear Sterns/AIG hopium cum bailouts on the horizon; lying and failure an option only for the kleptoligarchy.  Get back to work plebians, the bankers and politicians need more blood.

vh070's picture

Spain was like Ireland, except the British were buying up new housing, unlike the Irish, who just doubled up.  I wonder how all those retirees are doing in the sun...

CTG_Sweden's picture


Spain should probably have left the Eurozone in 2011 or earlier. The Spanish debt/GDP ratio would probably be about the same as for Italy if Spain would leave the Eurozone now. I guess that a +30 % depreciation of the peseta would be a realistic figure if Spain would drop the euro and replace it with the peseta. I suppose that domestic national debt could be converted to pesetas. But foreign creditors would probably not accept a +30 % reduction of the value of their securities voluntarily. But if the Spaniards wait longer before they exit the Eurozone foreign creditors will probably have to accept a significant reduction of the value of their securities.

It seems as if a country like Spain needs an edge as regards costs in order to be competitive. The tourist trade and farming would definitely benefit from a depreciated currency. I also think that it doesn´t make sense if the VW group pays Spanish workers more for building Seat automobiles than they are paying Czech workers to build Skoda automobiles. Spain does not produce almost anything that enables companies to pay wages similar to those in Germany. Therefore, Spain needs an edge as regards costs. And it is a lot more simple to accomplish that if they get their own currency which can depreciate instantly.


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