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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achmachat's picture

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

Ahmeexnal's picture

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

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?

Manthong's picture

We need a rating system for the SEC and CFTC.

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...

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?

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.

Jason T's picture

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

Tenshin Headache's picture

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

junkyardjack's picture

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

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.


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!

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!

CH1's picture

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

They must be killed now!

cougar_w's picture

They must be killed now!

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

cossack55's picture

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

Iwanttoknow's picture

I tried to give you an up arrow.

101 years and counting's picture

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

CvlDobd's picture

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

azzhatter's picture

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

WatchingIgnorance's picture

And forgot to list their favorite porn sites!!

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?

LongSoupLine's picture

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

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.

vast-dom's picture

shit sandwiches for the rioters! 

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.

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:

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.

carbonmutant's picture

"pitch down divergent"

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.

orangegeek's picture

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


Dr. Engali's picture

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

NotApplicable's picture

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

Stoploss's picture

:)))) Go Sean...

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.

Aunty Christ's picture

Spain should be rated B+

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.

John Law Lives's picture

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

Sudden Debt's picture

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

In America it accounts for 2 weeks of spending.

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. 

cbaba's picture

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

Sudden Debt's picture

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


FinalCollapse's picture

Hunting for King may soon become fashionable again.

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.

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.