Egan Jones Cuts Spain To BB- From BB+

Tyler Durden's picture


Love them or hate them, Egan Jones is always about 1 month ahead of the other rating agencies.

Spain has been weakened by the government deficit of 8.9%, the 24+% unemployment, the IIF's recent estimate of additional bank loan losses up to EUR260B, and possible depositor withdrawals. Over the past three fiscal years (i.e., 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. Unemployment is at depression levels of 24% while adjusted wage rates have declined.


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

As a reminder, once all the other rating agencies (and S&P already cut Spain to BBB+ a month ago, just 9 days after Egan-Jones again cut Spain from BBB to BBB-) cut Spain to BBB+ and lower, the country will see its haircut on ECB pledged bonds increase by another 5%, leading to collateral calls. More here.

Carry on.

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Tue, 05/22/2012 - 11:33 | 2451120 LawsofPhysics
LawsofPhysics's picture

LMFAO!  Cut everyone to fucking Z already.  Fucking bring it!  These people are a joke.

Tue, 05/22/2012 - 11:37 | 2451142 mayhem_korner
mayhem_korner's picture




Reality is more like the color scale for diamonds - starts at D (and only fools believe there are any of those).

Tue, 05/22/2012 - 11:59 | 2451245 markmotive
markmotive's picture

And who will pay for all this? The blue-collar working man, believe it or not.

Downgrades - while a reflection of reality - do not spite the elite class. They simply accelerate the theft from poor to rich.

Tue, 05/22/2012 - 12:04 | 2451261 The Big Ching-aso
The Big Ching-aso's picture



Egads Jones.

Tue, 05/22/2012 - 12:07 | 2451273 ilion
ilion's picture

I guess Spanish real estate will get even cheaper down the road. I'm holding on to my gold holdings, and when it's time I'll convert it into nice rental properties in Spain. 

Tue, 05/22/2012 - 13:18 | 2451565 fuu
fuu's picture


Tue, 05/22/2012 - 12:03 | 2451263 Joe The Plumber
Joe The Plumber's picture

Mispriced risk and asymmetry of knowledge accelerates the transfer of money to the elite. The public rating agencies were supposed to be an attempt to equalize the playing field so the rich could not take advantage of knowledge asymmetries

Tue, 05/22/2012 - 11:41 | 2451147 Oh regional Indian
Oh regional Indian's picture

Spain is a powder keg. No doubt about it. It's still a fighting nation and that 24% un-employment number does not reflact youth unemployment and definitely massive youth under-employment.

Add to the mix the huge influx of cheap eastern european workers in the two-wrist industry, massive African immigration, cultural mish-mash, housing bubble crashing, crashing, banks facing genuine liquidity crises...

And hovering above it all, the South America feeder tube via Santander. It's a Siphon and it doesn't take much to see where the money is going. 




Tue, 05/22/2012 - 11:41 | 2451160 The Alarmist
The Alarmist's picture

Egan Jones Cuts Spain To BB- From BB+

If a tree falls in the forest and no one is there to hear it, does a bear still shit in the woods?

Tue, 05/22/2012 - 13:24 | 2451271 The Big Ching-aso
The Big Ching-aso's picture



Spain needs to exit the Euro and issue a new currency called the Pesomuchogrande.

Tue, 05/22/2012 - 11:55 | 2451230 LasVegasDave
LasVegasDave's picture

Watch out Sean:

Nobody expects the Spanish Inquisition

Tue, 05/22/2012 - 11:33 | 2451122 tu-ne-cede-malis
tu-ne-cede-malis's picture

Sean Egan has four words for the SEC:


Come at me bro.

Tue, 05/22/2012 - 11:48 | 2451198 SokPOTUS
SokPOTUS's picture

Yep.  Great to see that they are undaunted.  Truth is the ultimate defense.

Tue, 05/22/2012 - 11:34 | 2451127 mayhem_korner
mayhem_korner's picture



Alas, BB+, we hardly knew thee.

Tue, 05/22/2012 - 11:34 | 2451129 Biosci
Biosci's picture

The downgrades will continue until morale improves.

Tue, 05/22/2012 - 11:36 | 2451134 Alejandrito
Alejandrito's picture

Egan Jones is the same at which the SEC has opened a procedure?

Does the same Egan Jones accused the SEC of violating Exchange Act Section for "misrepresentations and omissions" and "falsely testify that he had issued since 1995 when ratings until 2008 had not issued any"?

Tue, 05/22/2012 - 11:36 | 2451136 Sandmann
Sandmann's picture

The King od Siam used to bankrupt his courtiers with the gift of a sacred white elephant..........we in the West prefer to sponsor Banks rather as we used to be invited to sponsor African orphans.


Tue, 05/22/2012 - 11:40 | 2451148 mayhem_korner
mayhem_korner's picture



I vote for Egan Jones crashing the JPM hearings to testify Gensler...

Tue, 05/22/2012 - 11:39 | 2451149 PaperBear
PaperBear's picture

Does it seem that things are progressing according to a script ?

Tue, 05/22/2012 - 11:39 | 2451150 azzhatter
azzhatter's picture

How can we trust Egan Jones? It is said they left a comma out out of their application.

Tue, 05/22/2012 - 11:40 | 2451152 JustObserving
JustObserving's picture

"Egan Jones is always about 1 month ahead of the other rating agencies."

Egan-Jones downgraded USA to AA, the second downgrade in nine months on April 5, 2012 but no other rating agency has followed.

Perhaps, they were intimidated by the SEC charging Egan-Jones with With 'Misrepresentations' Of Ratings Acumen on April 24, 2012.


Tue, 05/22/2012 - 12:06 | 2451270 derek_vineyard
derek_vineyard's picture

wonder what egan jones screen name is here on ZH

Tue, 05/22/2012 - 11:40 | 2451154 HaroldWang
HaroldWang's picture

And Europe flies higher, as does the US. All just a dead cat bounce, kids and nothing more.

BTW: Redbook, Goldman Retail numbers both down again and of course blamed on wetter cooler weather as opposed to warm, dry weather that was the old excuse. And let's nobody, I mean, nobody mention that Richmond Fed number. 

Tue, 05/22/2012 - 11:45 | 2451189 Poetic injustice
Poetic injustice's picture

Yes, weather is always of wrong type.

Tue, 05/22/2012 - 11:41 | 2451162 sockratte
sockratte's picture

This is the end, beautiful friend 
This is the end, my only friend, the end 

Tue, 05/22/2012 - 11:41 | 2451163 Joe The Plumber
Joe The Plumber's picture

The SEC hasnt got rid of Egan Jones yet?

Heaven forbid the little investor even get a few crumbs of truth. How can the oligarchs with their private information flows front run the small investor iif risk is labeled accurately?

Tue, 05/22/2012 - 11:42 | 2451171 booboo
booboo's picture

"BB"........Stop stuttering god damn it, just spit it out, BROKE! Say it!!!! Soon to be FuFuFuFucking Broke, next stop WWWWar BBBBItchez!

Tue, 05/22/2012 - 11:42 | 2451172 HaroldWang
HaroldWang's picture

And then there's this chart:

Keep the presses alive!

Tue, 05/22/2012 - 11:45 | 2451185 tocointhephrase
tocointhephrase's picture

To be continued......

Tue, 05/22/2012 - 11:46 | 2451192 HaroldWang
HaroldWang's picture

CNBC interviewing a "retail" investor on live phone call about how he got "screwed" on FB initial offering. This guy should be embarrassed for not only participating but going on national tv to tell everyone how stupid he is. 


Tue, 05/22/2012 - 11:57 | 2451234 Shizzmoney
Shizzmoney's picture


Hey CNBC.......if I wanted to hear a bad beat story, I'd go to a casino.

Tue, 05/22/2012 - 11:51 | 2451216 mayhem_korner
mayhem_korner's picture



The singing Quint never gets old...

Farewell and adieu to ya dear Spanish ratings

Farewell and adiew dear ratings of Spain

Tue, 05/22/2012 - 13:58 | 2451699 Shitters_Full
Shitters_Full's picture

"We're gonna need a bigger boat loan."

Tue, 05/22/2012 - 11:54 | 2451225 Calidreaming
Calidreaming's picture

Eurobonds solve everything.   Just ask Bernanke -He told me that.



Tue, 05/22/2012 - 12:31 | 2451370 slackrabbit
slackrabbit's picture

and god bless his printer

Tue, 05/22/2012 - 11:54 | 2451228 Dr. Engali
Dr. Engali's picture

I think Egan Jones needs to be investigated. There is no room for integrity in this business. 

Tue, 05/22/2012 - 11:58 | 2451240 scatterbrains
scatterbrains's picture

Peter Schiff is schooling the folks on Bloom radio right now.  They're all acting like, huh ? wut? who? preposterous!!  Git'em Pete!

Tue, 05/22/2012 - 12:08 | 2451277 Wheninfinance
Wheninfinance's picture

Egan Jones is one shady place, but this is basically what Tyler Durden thinks will happen to the world.

Tue, 05/22/2012 - 12:10 | 2451293 viator
viator's picture

"Assets of Spain's largest two banks exceed its GDP"

Above quote from the Egan Jones downgrade.

Ratings agency Moody's Investors Service has downgraded the credit ratings of 16 Spanish banks - including the country's largest financial institutions, Banco Santander (#1) and Banco Bilbao Vizcaya Argentaria (#2) - by between one and three notches."




Tue, 05/22/2012 - 12:21 | 2451327 ebworthen
ebworthen's picture

SEC to investigate this egregious violation of perception management.

Tue, 05/22/2012 - 12:30 | 2451365 slackrabbit
slackrabbit's picture

BO: How dare they tell the truth...kill them

Tue, 05/22/2012 - 12:35 | 2451393 Balmyone
Balmyone's picture

I always wonder why European citizens, particularly Spanish, Greek, Italian, Portuguese citizens aren't scrambling to take all the money they're withdrawing from banks into precious metals.

Where are they putting their cash, I wonder.


Tue, 05/22/2012 - 12:39 | 2451408 sockratte
sockratte's picture

well, they think the euro has still some value...

Tue, 05/22/2012 - 12:53 | 2451468 Monedas
Monedas's picture

Collapsing bra cup size, Batman !    Monedas   1929    Comedy Jihad Leaky Implants

Tue, 05/22/2012 - 13:33 | 2451612 willien1derland
willien1derland's picture

Give'em HELL Sean Egan & Company - Integrity is a missing virtue within the financial community & Egan's team has it - Unfortunately, Moody's still sits at A1 because they gots credibility....ummmm but that's what Barney Frank said...

Tue, 05/22/2012 - 13:35 | 2451617 Ljoot
Ljoot's picture

B's were always good in school, and two B's? Well say no more! Sounds like a good deal to me!


Tue, 05/22/2012 - 14:16 | 2451789 BlackholeDivestment
BlackholeDivestment's picture

...the loss of liberty is one of many revelations of ''change'',  like a tax that binds you to the beast ...which is bankrupt, and tied to all the nations such as Spain etc... Everyone of you is the ''asset'' of the beast. If you accept the moral corruption, now the ''new world order global standard, and continue on as usual, you are sealed in judgment and shall not escape, because, you did not have mercy, not even for yourself. That is prophetic by the way. the market has no mercy for labor, so shall you be consumed by the fruit of your own wrath. Investors are their own worst enemies and shall Face the Book. Lol


There are storms like you have never seen, floods, tornados, earthquakes, tsunamis etc... and if you are on zh you surely know you have never seen a global market like this pathetic one. Prophetic, and there is no denying that, but by the denial of what is defined by the signs of the coming of the Mercy of our Father in Christ, returning Mercy to all whom accept The Risen Revelation and confirmed life, as you were.  

The future price of the stock market shall be ZERO. The Truth is not a Choice.

Fri, 05/25/2012 - 02:49 | 2461468 agagshoes
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