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Fitch Gives Europe Not So High Five, Downgrades 5 Countries... But Not France
Festive Friday fun:
- FITCH TAKES RATING ACTIONS ON SIX EUROZONE SOVEREIGNS
- ITALY LT IDR CUT TO A- FROM A+ BY FITCH
- SPAIN ST IDR DOWNGRADED TO F1 FROM F1+ BY FITCH
- IRELAND L-T IDR AFFIRMED BY FITCH; OUTLOOK NEGATIVE
- BELGIUM LT IDR CUT TO AA FROM AA+ BY FITCH
- SLOVENIA LT IDR CUT TO A FROM AA- BY FITCH
- CYPRUS LT IDR CUT TO BBB- FROM BBB BY FITCH, OUTLOOK NEGATIVE
And some sheer brilliance from Fitch:
- In Fitch's opinion, the eurozone crisis will only be resolved as and when there is broad economic recovery.
And just as EUR shorts were starting to sweat bullets. Naturally no downgrade of France. French Fitch won't downgrade France. In other news, Fitch's Italian office is about to be sacked by an errant roving vandal tribe (or so the local Police will claim).
Full release:
FITCH TAKES RATING ACTIONS ON SIX EUROZONE SOVEREIGNS
Fitch Ratings-London-27 January 2012: Fitch Ratings has today concluded its review of the six eurozone sovereigns it placed on Rating Watch Negative (RWN) on 16 December 2011.
The rating actions on the long-term (LT) and short-term (ST) Issuer Default Ratings (IDRs) are as follows:
-Belgium LT IDR downgraded to 'AA' from 'AA+'; Negative Outlook; ST IDR affirmed at 'F1+'
-Cyprus LT IDR downgraded to 'BBB-' from 'BBB'; Negative Outlook; ST IDR affirmed at 'F3'
-Ireland LT IDR affirmed at 'BBB+'; Negative Outlook; ST IDR affirmed at 'F2'
-Italy LT IDR downgraded to 'A-' from 'A+'; Negative Outlook; ST IDR downgraded to 'F2' from 'F1'
-Slovenia LT IDR downgraded to 'A' from 'AA-'; Negative Outlook; ST IDR downgraded to 'F1' from 'F1+'
- Spain LT IDR downgraded 'A' from 'AA-'; Negative Outlook; ST IDR downgraded to 'F1' from 'F1+'
All the ratings have been removed from RWN, with the Negative Outlook on all six countries indicating a slightly greater than 50% chance of a downgrade over a two-year time horizon. The eurozone 'AAA' country ceiling has been affirmed for all six sovereigns. All senior unsecured issues of the six countries are affirmed in line with the new rating levels above. The ratings of guaranteed issuance by National Asset Management Ltd. are affirmed at 'BBB+' and 'F2' in line with the Irish IDRs.
As outlined in its rating review press release of 16 December 2011, Fitch has now considered both systemic and country-specific factors for these six sovereigns. As a result, the agency has reduced the score it assigns to capture financing flexibility in its assessment of the credit profiles of eurozone sovereigns that have large fiscal financing needs and significant financial/economic imbalances.
Moreover, rising "home bias" in the allocation of capital, the divergence in monetary and credit conditions across the eurozone, and near-term economic outlook highlight the greater vulnerability to monetary as well as financing shocks faced by these sovereign governments. Consequently, these sovereigns do not, in Fitch's view, accrue the full benefits of the euro's reserve currency status. The net impact of this revision under Fitch's sovereign rating methodology is to lower the long-term ratings of the affected sovereigns by one notch.
This one-notch revision was applied to Belgium, Italy, Slovenia and Spain, but not to Cyprus and Ireland, where their loss of market access had already been demonstrated by their need for official/bilateral support and is already reflected in their low investment-grade ratings. The downgrade for Cyprus, and the additional one-notch cuts for Italy, Spain and Slovenia (ie a total of two notches for each) reflect country-specific concerns primarily related to the banking sector in Cyprus and Slovenia; an adverse shift in the interest-rate growth differential and hence public debt dynamics in Italy; and a significantly worsened fiscal and economic outlook in Spain. A more detailed rating rationale can be found in six separate country specific press releases also being published shortly.
Overall, today's rating actions balance the marked deterioration in the economic outlook with both the substantive policy initiatives at the national level to address macro-financial and fiscal imbalances, and the initial success of the ECB's three-year Long-Term Refinancing Operation in easing near-term sovereign and bank funding pressures. Nonetheless, the intensification of the eurozone crisis in the latter half of last year undermined the effectiveness of ECB monetary policy and highlighted the financing risks faced by eurozone sovereign governments in the absence of a credible financial firewall against contagion and self-fulfilling liquidity crises.
Fitch recognises the significant commitments made at the 9-10 December and previous EU Summits to enhance economic policy coordination so as to prevent a recurrence of the severe macro-financial imbalances that arose in the euro's first decade, as well as efforts to create a long-term framework for fiscal stability over the medium to long term. Fitch also anticipates that European leaders will make good on these commitments in the forthcoming 30 January summit. In addition, the decision to bring forward the creation of the European Stability Mechanism and increase the resources of the IMF, if implemented effectively, is a step towards enhancing the capacity of the eurozone to absorb adverse shocks, such as a disorderly Greek default, although such a shock is not the agency's expectation.
In Fitch's opinion, the eurozone crisis will only be resolved as and when there is broad economic recovery. It is evident that further substantial reforms of the governance of the eurozone will be required to secure economic and financial stability, including greater fiscal integration.
As previously noted, in the absence of greater clarity on the ultimate structure of a fundamentally reformed eurozone, the gradualist approach adopted by politicians to systemic reform will continue to be punctuated by episodes of severe financial volatility, entailing a significant economic and financial cost that erodes sovereign creditworthiness. It also means that a 'break-up' of the eurozone cannot be wholly discounted, although in Fitch's opinion the risk of such an outcome remains small. Fitch will continue to adopt a balanced and incremental approach to the rating of eurozone sovereign governments in recognition of the unprecedented nature of the systemic crisis and heightened uncertainty over the economic outlook for the region.
The Negative Outlooks on eight eurozone countries (the six sovereigns in this review along with 'AAA'-rated France and 'BB+'-rated Portugal) primarily reflect the risk that the crisis could intensify further. A deeper and more prolonged economic recession than currently anticipated would undermine political support for, and public acceptance of, fiscal austerity and structural reform. It would also have the potential to weaken the commitment of the economically and fiscally strongest eurozone countries, and the ECB, to providing necessary support to eurozone peers.
Fitch currently views that the sovereign credit profiles of the remaining eurozone sovereign governments (with the exception of 'CCC'-rated Greece, which has no Outlook assigned) continue to warrant Stable Outlooks, though each will be subject to active review through the course of the year. Fitch will consider on a country-by-country basis the extent to which the risks associated with the crisis, as well as the limitations on monetary and financial flexibility within the eurozone revealed by the crisis, may impact their long-term sovereign credit profiles
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oops...
WTF...turned on CNBS and see Maria Bartoromo talking to that filthy frog Jean-Claude Douchebag. Ruined my appetite.
Do you think she licke his wang to get the interview?
Why is the Euro up?
ECB spending the dollars from the FX swap....
Bitch should have downgraded them all to FFF
The downgrades weren't as bad as expected.
Mr. Lennon Hendrix beat me to it.
2103150
yeah, they just add fuel to further rallies
Rincewind I was wondering EXACTLY the same thing buddy....
I've been scratching my head thinking WTF??!!! This is insane - How have I just been burned on my EUR/USD short from 1.3104 last night. How the hell do downgrades and no resolution to Greece debt talls = EUR rallying over 100 pips?! Stinks to high heaven of manipulation. I am just at a complete loss as to what on earth is going on in this mental market
Maybe she FLEW IN HIS PLANE TO GET THE INTERVIEW (If you don't knowwhat I'm talking about, google her and flying back from China in a CEO's plane alone).
Don't worry. I'm sure it was all a mistake and they meant to upgrade those countries instead.
Here you go, this might be it:
Jan. 27, 2012, 2:02 p.m. EST
Dollar slips; Greek hopes buoy euro
EU’s Rehn says deal close between Greece, private creditors
NEW YORK (MarketWatch) — The dollar lost ground versus major currencies on Friday, with the euro finding support after a top European Union official said Greece and private creditors are near an agreement on voluntary write-downs on Greek-government debt.
http://www.marketwatch.com/story/us-dollar-moves-sideways-before-gdp-release-2012-01-26?link=MW_home_latest_news
Fitch is on a rampage! About time!
http://silverliberationarmy.blogspot.com/
Fitch is French. I wonder if that had influnce on it not downgrading FrAAAnce?
timber!
It's priced in.
yeah...bad GDP print, countries downgraded, and SPX here at 3:12 is down a whopping...1 point.
Sure, just the "rational markets" at work...whew.
EDIT: 3:23...and...it's gone. Market green. Fuck you Ben!
Well said! That's exactly what I was thinking too. When I heard the breaking news about Fitch downgrades I thought "oh good, that must mean SPX/DOW/EURUSD will be down at least 1%" but then when I checked markets it was like....." EUR up 80 pips, SPX down just 2.1pts". Absolutely reeks of manipulation and how could these be "priced" in already?? I mean come on....
Cyprus? How dare they!
lol
Correction: that is Six countries
The UN is going to need more cocaine
US is next
Cash infusion must not have made in time. Obama best get on the phone quick to Timmy G.
and euro is going up.... some1 is manipulating something... dunno what that is but got a feeling.
not even 20 points drop
Pssh like ratings matter.
/sarc off
Instead of takin' 'em down one notch with a 'negative' outlook, they should help out the MSM spin-doctors by droppin' 'em 3 notches, but tagging them with a 'positive' outlook. :D
Damn... they just skipped 'A' with Italy and went straight from 'A+' to 'A-'. That's extra hate right there.
Is the farce complete yet?
and now euro is over 1.32.... damn, should not shorted
something isn't right
Stupid rumors out of Davos that G20 softening their stance on giving IMF money to bailout Europe.
Obviously stupid FX algos have no clue that it is election season in the US. There is a greater probability that i marryJFK jr (yes he is dead) then there is of the US giving the IMF money to bailout Europe.
Go Go Algo's.
lizzy - like jfk jr., Europe is also dead.
But that will not stop the left wing facsists from trying to pump the green stuff into the corpse.
The Agenda for 2012 Davos is "The Issue of Income Inequality". As if they really give a shiite about the distribution. But like the Buffets and gates' in the US, they will preyend to care about the oppressed, thereby pressuring responsible monetarists to print print print. Da bastids'.
Clowns on Acid- like EUrope, America is also dead.
China! China! China!
*yawn*
Short on the rumor. Buy on the news. Of course it's easy to say after I just got clobbered myself. Damn, damn, damn. I should know better to turn off General Hospital to trade this market. Oh well, think I will go back to my bread and circus.
I thought only Vinny Barbarino could get an F+.
French Fitch Fucks the Five.
Say that 5x fast!
My poor adopted home of Cyprus already can't get financing. Wonder what will happen after the last tranche of loans from Mother Russia runs out?
http://www.cyprus-mail.com/cyprus/second-tranche-russian-loan-delivered/...
Better start drilling the rest of the gas fields and hope that we find a few trill of natural gas and be extra, extra polite to Exxon and Gazprom.
Otherwise Fitch might have to invent a new rating for Cyprus paper.
hint: FFF*shit
Isn't Moody's supposed to do their review of European outlooks before month end?
They did it ... those bucking fitchez.
This is so bullish it's bearish.
everything is either
a) Bullish
or
b) priced in
this is insane.
and after a brief five minute dip on this news the EUR/USD has rallied to fresh highs because, as we have seen over and over again...downgrades are totally bullish.
unbefuckinglieveable.
American soccer moms are getting their asses handed to them going short the EUR/USD. Looks like they won't be buying any unitards from lululemon this weekend.
Huh, no action on UK.
Fitch is French, right? Huh.
+1
i bet euro will open with gap on sunday
Asians are not stupid as we are. Plus there will be plenty of time to eat the news.
Since real money (Au) is posting a nice chubby green for the week, I'm declaring victory.
some1 is pushing on purpose, are there options expirations today?
with that kind of money to push it has to be ECB or FED directly. That's ilegal.
"In other news, Fitch's Italian office is about to be sacked by an errant roving vandal tribe (or so the local Police will claim)."
No, local Police will claim that the errant roving vandal tribe tripped and fell into the Italian office while brandishing clubs and pitchforks
You could downgrade all of them to junk, blow something up in Euroland with a bomb. A Euro president / or whatever they call themselves, could be assassinated. Iran could attack Israel, or vice versa. We could have another attack on our soil, etc., etc., you name it---and the markets would rally. Head banging going on here!!!!
Ireland still investment grade, hahahaa! The bar is very very low. These raters are a joke but if u're in need of bailout money to the tune 85 billion, have 10% budget deficit and massive zombie bank exposure on your shoulders, u're NOT investment grade. Oh boy, they sure know how to make a great friday night comedy.
so THAT explains todays 100 pip rise in EUR/USD
Is the European apocalypse priced in?
Is the German exit from the Euro priced in? Where can I buy calls on new German Dmarks say a strike of 1.40 USD with a 1 year expiry?
Todays marching orders were to close over 1.3200.
Come hell or high water, apparently.
Actually, technically the short (daily cloud base) is as 13240 so....if it fails before that....
guys dont know if you have seen this; this is from actionforex..this will never fly with anyone in Greece with early elections around the corner..even that goldman / imf puppet wont get this through the parliament..we will be back to 1.29s shortly::))
"Meanwhile, it's reported that Greek PM Papademos distributed a 10-page document from Troika to his ministers. The document included a list of measures recommended to be enacted by Greece. Among the list, the most important one is to pass a supplementary budget with additional austerity to meet fiscal targets in 2012, with sharp cuts in defense, health and redundant state entities. Also, troika is pressing Greece for reform of supplementary pensions and urged Bank of Greece to finish the assessments of Greek banks' capital shortfall. "
Still not cutting the UK... fucking pussies.
Cut Rothschildlandia?
Are you out of your mind?
Bloomberg, via Yahoo:
I think I read something on ZH a day or two ago about the non-local Greek-bonds, which were originated under the umbrella of UK law. The article was saying those bonds (significant in value, but not representative of the majority of Greek bond value) would be immune to the invoking of a CAC, and the event would therefore still be triggered for those who own the UK-originated bonds. The previous article made it sound like the Greek bonds already contained a CAC, but the Bloomberg piece makes it sound like a novelty Greece is considering.
So my questions are 1) do local Greek bonds already contain a CAC or not (i.e. giving a simple majority the ability to neutralize the power of the holdouts, instead of requiring unanimity, and 2) if they do not, would the ex post insertion of a CAC (itself being a credit event) be a credit event which applies to all non-local Greek bonds as well, like the UK ones?
Sorry for the un-Hemingwayesque run-ons.
A scam-artist Bond Rater called Fitch
Gave downgrades to Mitch, Hitch & Rich,
But Fitch pushed its luck
When it downgraded Huck
And ended face-down in the ditch
That's the best happening to EU countries: downgrades. The more, the better for the markets because no one cares. Reflation trade is on, strong EUR weak USD, that's what the markets like.
I guess Fitch wasn't intimidated by the Italian mafioso raids
Fitch obviously has not heard that Italy is fixed. In three weeks the Italians were able to undertake economic reforms that had evaded them for 60 years and are bearing visible results as we speak.
Ok, that was the gist of a ComedyNBC piece earlier today:)
Fitch should just downgrade the ECB, that would make more sense. TO F-
A Google news search turns up completely contradictory reports. One is up beat with everything but a celebration party. The next news piece is doom and gloom. Both reports are fresh. Who knows what is correct until SHTF?
algorithms have been reprogrammed to exclude the factor of news
muhahahaaaaaaaaaaaa How is your contra stolper trade doing???
so, why is fitch so sweet on france?
http://covert.mypressonline.com
Downgrading Cyprus, yes very brave. Why don't you downgrade Kreplakistan while you are at it. Fitch, you pussy, I do not know why you are still in business.
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