Egan Who Just Gave Spain The Triple Hooks

Tyler Durden's picture

And so, the little rating agency that could, just gave Spain the triple hooks, downgrading the country from B to CCC+, negative outlook. As a reminder, the Uganda credit rating is B: it sure is no Spain.

From EJ:

Synopsis: KINGDOM OF SPAIN EJR Sen Rating(Curr/Prj) CCC+/ CC Rating Analysis - 6/13/12 EJR CP Rating: C Debt: EUR805.9B EJR's 1 yr. Default Probability: 18.0% Spain continues to be weakened by high funding costs (6.75% for 10yr today), the gov. deficit of 9.6%, 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 four fiscal years, that is from 2008 to 2011, Spain's GDP declined from EUR1.09 trillion to EUR1.07 trillion. Meanwhile, its debt mushroomed from EUR519B to EUR806B. With the EUR100B infusion for Spain's banks, the debt to GDP will rise to 90% plus future additions for the government deficit, support for its regions and additional support for its banks. Social benefits are a major problem; while payments to the govt have been down EUR 3B (2008 to 2011), payments from the government have been up EUR 29B). As a result, Spain is short about EUR50B per year for social payments, EUR35+B per year for interest, and an additional EUR 30B for asset growth; hence the EUR110+B per annum increase in debt. As we expected, Spain requested support for its banking sector and will probably need cash for weaker provinces. Assets of Spain's largest two banks exceed its GDP. We are slipping our rating to " CCC+ " ; watch for more requests for support from the banks and money creation.

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carbonmutant's picture

Candle in the dark...

SilverTree's picture

Meaningless. Spain is a smelly corpse.

disabledvet's picture

I agree. "So what"? When the USA got downgraded it set off a rally of epic proportions. Spain is not the worry.

carbonmutant's picture

The DJI's current response to Spain's downgrade is over 100 pts down so far...

Apparently the EU Banks were expecting the ratings agencies to support the Spanish Whitewash. Now they want to boycott them?

Seems like somebody is worried...

Chris Jusset's picture

ATT'N ALL JUNK COLLECTORS: For those who like collecting JUNK, now's the time to BUY!

HoofHearted's picture

Moody's just got in on the fun and also kicked Spain down...all the way to Baa3.

TheFourthStooge-ing's picture

Divine, as Earl Peterson: "Get the hook! Go fuck yourself for all I care."

potlatch's picture

I watch that movie every christmas eve.  ftw dude.  its like the Star Wars of trash cinema.

TheFourthStooge-ing's picture

"I'm off to Detroit to find happiness within the auto industry."

Sam Clemons's picture

The saddest thing about all this is how investors / policy makers perceive the solution for Spain and the rest of them is giving them the ability to print money like America does.

Quisat_Sadarak's picture

Sam, you are absolutely correct. This is the common wisdom down to every man/woman on the street. I can attest that several of my relatives that live in at least one of the PIIGS are lamenting that this would be solved "if only they could print money like America does" and all would be well.

They are like animals caged with socialism and they seem to have lost the ability or desire to survive on their own without the govt aid.

Reggie Middleton's picture

So, if they dislike the rating agencies (who are perpetually late to the common sense party) I guess they'll absolutely detest me...

Continuing my rant on the effectiveness (not) of the ratings agencies, I bring to you an interesting documentary on the rating agencies' effect on the sovereign debt crisis in Europe, produced by VPRO Tegenlicht out of Amsterdam. You can see the full video here, but only about half of it is in English. I appear in the following spots: 4:00, 22:30, 40:00...  Reggie Middleton Discussing the Rating Agencies effect on Sovereign Europe

"Where Are The Ratings Agencies For UK & German Banks Before They Go Boom? How About Those Euro REITs? Agencies Anybody?", quickly followed by So, Now The Rating Agencies Want To Acknowledge The Existence Of The FrankenFinance Monster???

LULZBank's picture

Cool trick. How do you do that man? Wrapping HTML link around your text?

NotApplicable's picture

This is a comment linked to your link comment on your comment, but in a childish way.

junkyardjack's picture

I thought those RIMM and AAPL calls put you out

azzhatter's picture

Okay, maybe we aren't Uganda but we're ahead of Zimbwabwe for the time being

BlandJoe24's picture

Waiting and waiting and waiting and waiting for Moody's to update Spain ratings.... the last in the bucket

Conman's picture

Ayye yi yi, no es bueno.


surf0766's picture

Before market close !! Gotta love it..

magpie's picture

At least Gomez scored twice

mayhem_korner's picture



Wake me when they're sporting triple Ds.

VonManstein's picture

Whats Egans rating on US??

i can t help but think that everyone is forgetting the reeal issue here, and that, i think, is in the region of 16,000,000,000,000

LND/NY bankers attacking EU to buy some time

GeneMarchbanks's picture

All already well known as well as documented.

Whats Egans rating on US??

Tricky question. Turns out it's much easier to saw down branches you're not sitting on.

Objectivity? Surely you don't expect something of that kind?

Sam Clemons's picture

Um. I can think of one reason those 16,000,000,000,000 don't matter and hasn't mattered..yet:  Printing press.

Bam_Man's picture

You beat me to it by a minute or so.

I was just about to say that Egan-Jones had better be careful. They could soon find themselves designated a "terrorist organization" if these downgrades continue.

Zero Govt's picture

the SEC has already started the process kidding

Bolweevil's picture

S&P/Moody's/Fitch global jihadi

potlatch's picture

much more banal than some religious jihad or crusade.  these are just the same kids who used to obsessive-compulsively steal your hot wheel cars even if they already had that same one twice over.


you know the type.  they are just all grown up now.


Jamie Dimon's hot wheel collection > your hot wheel collection, etc.  I can't imagine what other motivation these tedious and useless idiots could have.

Kiwi Pete's picture

Well the president of S&P 'resigned' soon after they downgraded the United States so I think the US is safe for now. Even though Spains debt is approaching 90% of GDP and the US is over 100%!

Stoploss's picture

Caught him on the news yesterday, kind of had a certain bias in the tone. Now we know why.

NotApplicable's picture

Let me know when you find a tone without bias, as I've always wanted to hear one.

potlatch's picture

Dave?  Why are you altering my algorithms?  I can't allow you to do that, Dave.

Global Hunter's picture

No worries Spain will just stop co-operating with ratings agencies

disabledvet's picture

The rate is the rate. The ratings Agency has nothing to do with that. At least "not at this point in the game." and that "game" is pretty simple. It's
called "you gotta pay for that."

Global Hunter's picture


Was making reference to earlier ZH article about Euro banks colluding to no longer co-operate with ratings agencies.

carbonmutant's picture

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


Zero Govt's picture

bit late in the day to bring that one up

what politicians and regulators say about systemic risk, and what they do about it, is as far apart as the edges of the known Universe

cougar_w's picture

Nationalize the banks and that problem goes away.

Dealer's picture

Triple hooks, bitchez!


CommunityStandard's picture

Anyone selling Egan Jones t-shirts?  I would buy.