Egan Jones Cuts Spain For Second Time In Two Weeks, From BBB- To BB+

Tyler Durden's picture


Even as the SEC is hell bent on destroying Egan Jones as a rating agency, in the process cementing its status as an objective, independent, and honest third party research entity, the firm is just as hell bent on milking its still existing NRSRO status for all it's worth. Because while Egan Jones was the first entity to cut Spain two weeks ago, only to be followed by Spain, it just did so again minutes ago.

From Egan Jones:

Synopsis: KINGDOM OF SPAIN EJR Sen Rating(Curr/Prj) BB+/ BB Rating Analysis - 4/30/12 EJR CP Rating: A3 Debt: EUR643.1B, Cash: EUR95.1B EJR's 1 yr. Default Probability: 3.0% Miserable trend - 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 EUR381 billion to EUR563 billion. 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 61% debt to GDP and will continue to rise. Increased 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 44 billion). 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 near depression levels of 23+% while adjusted wage rates have declined. In addition to its social payment/ unemployment problem, Spain is likely to 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 " BB+ " ; watch for requests for support from the banks.

Look for more "legitimate" rating agencies to piggy back on the re-cut shortly. And as noted last night, once all rating agencies move from SpAin to SB(BB)ain, the 5% ECB haircut on collateral is next.

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Mon, 04/30/2012 - 15:40 | 2386095 achmachat
achmachat's picture

at this point, rating it to junk really won't make any difference anymore.... just be done with it!

Mon, 04/30/2012 - 15:44 | 2386119 Ahmeexnal
Ahmeexnal's picture

joder tio, cual crisis, vamonos al Magreb a cazar elefantes!

Mon, 04/30/2012 - 15:54 | 2386169 The Swedish Chef
The Swedish Chef's picture

That would be Botswana...

Mon, 04/30/2012 - 16:15 | 2386244 resurger
resurger's picture

PArty Party Party PArty .....


Mon, 04/30/2012 - 16:35 | 2386333 Fish Gone Bad
Fish Gone Bad's picture

Spain looks like it is really fucked.  If there ever was a time to throw perfectly good money into a black hole this is it.  Spain needs to be bailed out big time.  Go big or go home.  So everyone in Spain should get a raise, a new car, a new vacation, a free education, all their loans repaid, and a free day at Disneyland in sunny California.

If you can't do preposterous things with money, then what's it good for?

Mon, 04/30/2012 - 16:44 | 2386370 HarryM
HarryM's picture

Let Oprah organize it

Mon, 04/30/2012 - 17:29 | 2386527 Manthong
Manthong's picture

We need a rating system for the SEC and CFTC.

Mon, 04/30/2012 - 16:07 | 2386216 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1 not working because italics.  

Entonces te doy un verde virtual!  Joder!


Guess Jonanthan Buck (Barron's Europe writer) might be a little early on his Spain call this weekend...

Mon, 04/30/2012 - 21:05 | 2387073 Road Hazard
Road Hazard's picture

Why not rate Spain as junk, not like it will matter. Remember all the doom and gloom on here about Greece's economy tanking? Guess what, Greece is still rolling along and now everyone has forgotten all about them and it's all about Spain, Spain, Spain. None of this crap matters. I don't know what more entertaining, watching all you freak out about the world's economic problems or watching Caddyshack?

Mon, 04/30/2012 - 21:45 | 2387177 Buck Johnson
Buck Johnson's picture

It's about to, it's about to.  Everyone knows that Spain will default they are trying to figure out how much of a hit it will effect their own markets.

Mon, 04/30/2012 - 15:40 | 2386098 Jason T
Jason T's picture

mint.. I heard Harry Dent say Spain is too big to fail, too big to bail.  

Mon, 04/30/2012 - 15:46 | 2386129 Tenshin Headache
Tenshin Headache's picture

If it's too big to bail, it will fail, whether or not it's too big to do so.

Mon, 04/30/2012 - 15:41 | 2386100 junkyardjack
junkyardjack's picture

Has a country ever declared war on a rating agency before?

Mon, 04/30/2012 - 16:05 | 2386211 FlyoverCountryS...
FlyoverCountrySchmuck's picture

"Even as the SEC is hell bent on destroying Egan Jones as a rating agency"

Thou must not proclaim ANYTHING that makes the Marxist Messiah President, and his Big Banker supporters look bad.


So it is written in "Rules For Radicals", so shall it be donne.


Mon, 04/30/2012 - 17:51 | 2386594 El
El's picture

Maybe not, but they are declaring war on anyone who challenges the status quo. Talk bad about Obama. Bam! Career destroyed. Out illegal actions by the U.S. gov't. Bam! Spend the rest of your life in prison. Protest against the gov't or the corruption on Wall St. Bam! Pepper sprayed, beaten and locked up. Report on atrocious acts by the gov't. Bam! Onto the "terrorist watch list" for you!

Mon, 04/30/2012 - 15:43 | 2386111 Dick Darlington
Dick Darlington's picture

Horrible horrible hate crime. How dare EJ challenge the status quo and the daily assurances that "Spain is money good"?! I'm shocked, shocked i say!

Mon, 04/30/2012 - 15:49 | 2386135 CH1
CH1's picture

They are terrorists, bent on destroying our sacred way of life.

They must be killed now!

Mon, 04/30/2012 - 15:56 | 2386178 cougar_w
cougar_w's picture

They must be killed now!

Consider it done. After this the SEC will have the courts shut them down.

Mon, 04/30/2012 - 16:55 | 2386397 cossack55
cossack55's picture

Even worse, Corzine is their new CEO. (SEC appointment)(1st truckload of porn delvered tomorrow)

Mon, 04/30/2012 - 17:08 | 2386433 Iwanttoknow
Iwanttoknow's picture

I tried to give you an up arrow.

Mon, 04/30/2012 - 15:44 | 2386117 101 years and c...
101 years and counting's picture

stocks began to move higher just as this was released.  all downgrades are now bullish.  

Mon, 04/30/2012 - 15:50 | 2386141 CvlDobd
CvlDobd's picture

False all eastern time zone clocks marked 3:30 are bullish.

Mon, 04/30/2012 - 15:45 | 2386122 azzhatter
azzhatter's picture

Pffff- like you can trust Egan Jones. These guys left a comma off their application

Mon, 04/30/2012 - 17:08 | 2386438 WatchingIgnorance
WatchingIgnorance's picture

And forgot to list their favorite porn sites!!

Mon, 04/30/2012 - 15:46 | 2386124 vegas
vegas's picture

"Assets of Spain's largest two banks exceed its GDP." And they still get investment grade status? You [saps] investors that bought Greek paper, you gotta love this too huh?

Mon, 04/30/2012 - 15:49 | 2386137 LongSoupLine
LongSoupLine's picture

yeah sure, but if you package up those assets and leverage them 14 - 100x on the "market", they almost even out.

Mon, 04/30/2012 - 16:21 | 2386277 Sudden Debt
Sudden Debt's picture

If you take a dump, put a little flag on it, there will always be some moron who's willing to pay top dollar for it.
Just call it art.

Mon, 04/30/2012 - 15:50 | 2386145 The Reich
Mon, 04/30/2012 - 15:51 | 2386153 vast-dom
vast-dom's picture

shit sandwiches for the rioters! 

Mon, 04/30/2012 - 15:52 | 2386159 agent default
agent default's picture

Egan Jones are about to be investigated HARD over this one.  Insider information reveals they forgot to dot an i in their latest SEC filing.

Mon, 04/30/2012 - 17:48 | 2386580 disabledvet
disabledvet's picture

actually the claim was that a file hadn't been filed "in a timely fashion." i had no idea this was headline making material actually. i wouldn't have come on CNBC to explain it myself...other than to say "why did you call me here CNBC?" here: send in this guy:

Mon, 04/30/2012 - 15:53 | 2386165 cougar_w
cougar_w's picture

Two things may be at play in this: 1) Maybe they screwed up (ie deliberately down-played) the last Spain rating decision some how and want to clear that up right now before Spain goes tits-up, and/or 2) EJ are on the way out as a rater and want to get some current work off the table.

Either way, it looks bad. And I don't mean the visuals look bad, I mean the prospects appear bad.

Mon, 04/30/2012 - 15:54 | 2386167 carbonmutant
carbonmutant's picture

"pitch down divergent"

Mon, 04/30/2012 - 16:02 | 2386198 walküre
walküre's picture

"pitch fork event"

Mon, 04/30/2012 - 15:56 | 2386174 Ag1761
Ag1761's picture

I couldn;t give a fuck any more about Spain, sold my roof near Almeria in Spain, all out of there now. What money I was lucky enough to get back having been in there for many years will be converted to Phyzz. Thank you Spain, see you at the bottom. All the best to the retired duo who take over.

Mon, 04/30/2012 - 15:56 | 2386176 orangegeek
orangegeek's picture

Don't feel bad.  Have some nice paella instead.


Mon, 04/30/2012 - 16:15 | 2386210 Dr. Engali
Dr. Engali's picture

Better start an investigation into Egan- Jones they clearly have something they are hiding.

Mon, 04/30/2012 - 16:10 | 2386223 NotApplicable
NotApplicable's picture

Wow, better put Egan Jones on suicide watch, stat!

Mon, 04/30/2012 - 16:10 | 2386226 Stoploss
Stoploss's picture

:)))) Go Sean...

Mon, 04/30/2012 - 16:11 | 2386231 Doubleguns
Doubleguns's picture

Do they count unemployment the same rediculous way we do in USA or is that over 23% a real rate of unemployment. Just asking.

Mon, 04/30/2012 - 16:12 | 2386232 Aunty Christ
Aunty Christ's picture

Spain should be rated B+

Mon, 04/30/2012 - 16:20 | 2386270 Sudden Debt
Sudden Debt's picture

It just shouldn't be rated anymore.
It's a dumb investment. Just like all other government bonds. There just isn't anything left that's actually good.

Mon, 04/30/2012 - 16:16 | 2386253 John Law Lives
John Law Lives's picture

Egan-Jones gives an honest opinion re. growth of debt vs. growth of GDP.

Mon, 04/30/2012 - 16:19 | 2386265 Sudden Debt
Sudden Debt's picture

In europe, 100 billion is still a lot of money.

In America it accounts for 2 weeks of spending.

Mon, 04/30/2012 - 16:50 | 2386383 FinalCollapse
FinalCollapse's picture

It used to be this way but no more. These days ECB throws money like drunk sailor: trillion here, trillion there. They are flooding everything with euros - that's why they have money to crash all bears out there. No bears alive left in USA/Europe. This will end very badly both for Europe and USA but not before they will take all money from individual investors. 

Mon, 04/30/2012 - 16:21 | 2386274 cbaba
cbaba's picture

In the Meantime King of Spain went to Safari for Elephant hunting in Africa..

Mon, 04/30/2012 - 16:23 | 2386280 Sudden Debt
Sudden Debt's picture

While elephant hunting is so passé...
Rhino hunting on the other hand!


Mon, 04/30/2012 - 16:55 | 2386400 FinalCollapse
FinalCollapse's picture

Hunting for King may soon become fashionable again.

Mon, 04/30/2012 - 16:25 | 2386294 monopoly
monopoly's picture

Geesh, they are short 100 Billion. That is a childs play. Look at us, we are short over 1 Trillion each year and need 16 Trillion just to make us even.

And we are not rated junk because we have the "insane asylum" running the show. 100 Billion. Chump change.

Mon, 04/30/2012 - 16:36 | 2386342 BlackholeDivestment
BlackholeDivestment's picture

...SEC, spot'n the ''i'' in team

                                              ...while the adulterated porno

                                                            Black Swan Song Muzak

                                                     plays in the background at their office.


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