Moody's Warns Spain It Will Downgrade "More Than 21" Spanish Banks - Expansion

Tyler Durden's picture


It was such a promising morning for Spain which sold some €2.5 billion in 2015 and 2016 bonds earlier in yet another meaningless and symbolic LTRO-covered exercise, when things went from bad (bank run, pardon, withdrawal meme) to worse, as local Expansion newspaper says Spanish bank ratings will be downgraded in a few hours.

Google translated:

The rating agency Moody's announced this morning that the Spanish bank announced in the next 12 hours, as by law, a reduction in its credit rating could affect more than 21 entities. According to several sources, the statement will be released expected at nine in the evening.


As Standard & Poor's for two weeks, the reduction occurs automatically as a result of the downgrading of the debt of the Kingdom of Spain and not motivated by the dynamics of each of the entities. It is a performance similar to that made ??Moody's with Italian banks .


Among the arguments of the cut score are the adverse conditions facing the banking business in a macroeconomic environment of recession and the rapid deterioration that is suffering the delay.


Furthermore, for months are not entities access to capital markets, although they have settled their funding through the open bar of liquidity.


The action by Moody's is the result of a process initiated in February 2012 when he decided to check the creditworthiness of all European banks to "the adverse and prolonged effect of the crisis in the euro area and the deterioration in the rating of several European governments ". On Tuesday, Moody's downgraded the rating to 26 Italian banks , a move not sitting very well in the sector and have described as "irresponsible" given the current situation.


The decrease in the rating of Spanish banks comes at a delicate moment, just after the Government has announced the partial nationalization of Bankia and a new decree to require institutions increased provisions for possible losses in real estate.


In addition, Standard & Poor's and dealt a blow to Spanish banks two weeks ago and left several of them in junk bond levels. And back again threatens to rule later this month.


Analysts at Moody's published this week a report indicating that Spanish banks "are vulnerable to the recession and the continuing housing crisis. The problem loans and losses will continue to grow, including categories such as residential mortgage loans, loans SMEs and consumer finance segments not covered by the recent royal decree. The vulnerability of banks to these adverse conditions is a factor in revising the rating of many Spanish banks. "

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Thu, 05/17/2012 - 07:29 | 2434544 JackT
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Thu, 05/17/2012 - 07:33 | 2434553 Killtruck
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This shit is starting to get real.

Thu, 05/17/2012 - 07:37 | 2434559 Dr. Engali
Dr. Engali's picture

No disrespect , but I wish I had an ounce of silver for every time I read that comment, and thought that same thought, over the past year. But they keep managing to pull something off and kicking the can a little further.

Thu, 05/17/2012 - 07:46 | 2434584 Short Memories
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Amazing what you can do in the short term when you can print money!

Thu, 05/17/2012 - 08:19 | 2434649 smb12321
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I don't think it's because of money printing.  It's because of the citizens of the West and their growing acceptance that the State can solve any problem.  In fact, to the majority, the State is the ONLY one who can solve problems.  So, although anyone with an IQ over 7 can see a financial disaster in the works, they simultaneiously cling to faith in the State. 

We are about to answer the question:  Who best can provide for human needs - a market of free ideas and choice or the State with mounting regulations, capricious temporary laws and manipulative bureaucrats. 

Thu, 05/17/2012 - 08:26 | 2434671 Killtruck
Killtruck's picture

@ Engali - I completely agree. I'm further amazed that I still even say that phrase. You'd think that I'd be completely jaded, depressed and fatalistic by now, but apparently (subconsciously), I am not.

Thu, 05/17/2012 - 07:58 | 2434594 DoChenRollingBearing
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@ Dr. Engali

YES!  + 1

Their abilities to keep kicking the can down the road are breathtaking...

Thu, 05/17/2012 - 08:06 | 2434615 Al Gorerhythm
Al Gorerhythm's picture

So, if the Euro is toast, the Pound is toast, the Yen is living in an iron lung and collectively they are all valued using an exchange rate formula of each other's perception of trust to settle, then what exactly is the $US index a measure of. I'm perplexed. Further, being the "reserve" debt ladden currency of the world, what properties give it the role of the world's monetary numeraire?

Thu, 05/17/2012 - 08:14 | 2434628 Al Gorerhythm
Al Gorerhythm's picture

Reeled me in one. Where's your buddy?

Thu, 05/17/2012 - 08:23 | 2434664 smb12321
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The dollar will only strengthen as other currencies hit the dust.   That may infuriate a lot of ZH readers but the hard facts are that the dollar is the global currency, it can be printed and it emanates from the most powerful nation on Earth.  Forget China, India, Russia, Iran and their deals.   It has not (and will not) affect the status of the dollar.

The run on the dollar will begin when we can no longer buy debt at a low rate and that will not be for a LONG time since the FED is now trapped into zero interest rates for eternity.

Thu, 05/17/2012 - 08:33 | 2434698 tocointhephrase
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Fuck off Jon Nadler, you cun't'

Thu, 05/17/2012 - 09:13 | 2434759 Al Gorerhythm
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It can certainly be printed alright, but if trust is its only redeeming property (other than a medium for exchange), that provides the basis for its "numeraire" status, then how can we measure other derivatives of it, against it? What is the implied value of an unrequited or broken pledge? Ask a Spaniard or Greek. Ask any saver. Ask any holder of a US debt.

Thu, 05/17/2012 - 08:13 | 2434563 LULZBank
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The shit was always real, now just that the suger coating is coming off.

Thu, 05/17/2012 - 08:29 | 2434684 JackT
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Yes, it seems the accelerate is stuck. I'm sure they are doing everything they can to try and "fix" it.

It is amazing at how fast events can begin to occur.  If they don't jimmi this sucker quick...we're heading over a cliff. 

Thu, 05/17/2012 - 07:33 | 2434554 Ray1968
Ray1968's picture

When will the run on BOA begin?

Thu, 05/17/2012 - 07:55 | 2434577 DoChenRollingBearing
DoChenRollingBearing's picture

Not until I get back I hope!

No bank runs here in Korea (yet?).

Google: "Seoul, Korea, Goldman Sachs 666"

"666" bothers some people over here too...


Thu, 05/17/2012 - 08:44 | 2434733 john39
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blankfein told the public that he was doing "god's" work...  but, he was a bit vague on whom he considered god.  I suspect his version may differ from the average persons (like most of the power elite).

Thu, 05/17/2012 - 08:59 | 2434780 Al Gorerhythm
Al Gorerhythm's picture

Being dixlesic I got the shit end of the stick. I'm doing dog's work.

Thu, 05/17/2012 - 08:03 | 2434608 LULZBank
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When people will start eating Gold or Mungers eyes get in some sort of planetary alignment, whatever comes first.

Thu, 05/17/2012 - 08:35 | 2434703 tocointhephrase
tocointhephrase's picture

CNBC (Chats Nothing But Crap)

Thu, 05/17/2012 - 08:25 | 2434668 Vince Clortho
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Thu, 05/17/2012 - 08:30 | 2434681 blabam
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Thu, 05/17/2012 - 07:30 | 2434545 ihedgemyhedges
ihedgemyhedges's picture


Thu, 05/17/2012 - 08:00 | 2434602 LULZBank
LULZBank's picture

Put in some olive oil and feta cheese and serve with ouzo.

Thu, 05/17/2012 - 07:34 | 2434558 Dr. Engali
Dr. Engali's picture

Don't worry Facebook will save us. They have 800 million user , dontchya know?

Thu, 05/17/2012 - 07:42 | 2434571 LULZBank
LULZBank's picture

Making friends on Facebook, using my iPhone and then arranging to meet up for half priced meals or events via Groupon ... This has to be the epitome of human civilisation and advancement.

I would recommend everyone to diversify their investments. 10% in precious metals and 30% each in stocks of Apple, Facebook and Groupon.

Do it for the humanity. Do it for our way of life.

Thu, 05/17/2012 - 07:58 | 2434599 a growing concern
a growing concern's picture

But what about LULU?!?!?!?!?!?!?!?!?!?!?!?!?!?!?!?!

Thu, 05/17/2012 - 07:45 | 2434579 Soul Train
Soul Train's picture

ha ha, that is so funny. Facebook - a short term fad open for lots of new competition.

They'll screw up Facebook as they get greedy and try and monetize everything to justify stock price.

Thu, 05/17/2012 - 07:57 | 2434595 John Law Lives
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"a short term fad open for lots of new competition"

Facebook may prove to be a fad, but it has compiled a tremendous amount of personal information on hundreds of millions of willing users.  Amazing how willingly people will share a vast amount of information about themselves on a public forum.

Thu, 05/17/2012 - 08:25 | 2434669 El Oregonian
El Oregonian's picture

"Don't worry Facebook will save us"

You mean the NSA/CIA created Facebook? Or, should this Gov't backed business be more accurately known as Facecrook...

Thu, 05/17/2012 - 07:38 | 2434561 LULZBank
LULZBank's picture

Moody's should have acted in a responsible and civilised way.

Thu, 05/17/2012 - 07:44 | 2434575 Inthemix96
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Dont worry folks, these are well educated very important people we are talking about here, they know what their doing for gods sake.

Don't let anyone tell you that these top people dont know what he fuck they are doing, because well, apparantly they fucking do. Strange fucking world innit??

Thu, 05/17/2012 - 07:45 | 2434576 John Law Lives
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Good news is rolling in this morning.  Here is some more:

JPMorgan’s Trading Loss Is Said to Rise at Least 50%


"The trading losses suffered by JPMorgan Chase have surged in recent days, surpassing the bank’s initial $2 billion estimate by at least $1 billion, according to people with knowledge of the losses."

Thu, 05/17/2012 - 07:46 | 2434583 KidHorn
KidHorn's picture

They speculated on european debt. Until they sell their assets, a true value of the loss can't be determined. Every day, their holdings are worth less, so every day, the number will grow bigger.

Thu, 05/17/2012 - 07:44 | 2434578 KidHorn
KidHorn's picture

Typical. After nationalization and bank runs, Moody's decides to issue downgrades.

Thu, 05/17/2012 - 07:59 | 2434600 GeneMarchbanks
GeneMarchbanks's picture

It's part of their We're-Still-Pretending-To-Be-Relevant campaign.

I believe Zandi started it. A true genius, that man.

Thu, 05/17/2012 - 08:24 | 2434666 Vince Clortho
Vince Clortho's picture

They wanted to get the downgrades in before the Bank Failures.

Thu, 05/17/2012 - 08:16 | 2434587 Al Gorerhythm
Al Gorerhythm's picture

China warns Australia it has to pick sides in the Pacific. China challenges the US for Pacific balance of Power.

Wayne Swan, Australias treasurer assures Australians that they are immune from European contagion. Says Australia can save Europe by throwing them a bit of spare cash.

Wayne Swan says that his government has made allowances for the European contagion; implies Australia ring-fenced against it. All's good.

Wayne Swan taxes Australian miners. Says he doesn't see how this makes Australia any less a business destination for foreign investors.

Wayne Swan voted the world's best treasurer (by Euromoney , whoever the fuck they are) and he is arrogant about it.

You just can't make this shit up.  Politicians are attracted to the halls of power like tapeworms to an anal tract.

Thu, 05/17/2012 - 08:49 | 2434738 Treason Season
Treason Season's picture

Like a conga line of suckholes

Thu, 05/17/2012 - 08:02 | 2434605 BeetleBailey
BeetleBailey's picture

Moody's reeks.

Ratings agencies are not too far from the sewer of the so-called "Better Business Bureau".


Thu, 05/17/2012 - 08:14 | 2434632 Inthemix96
Inthemix96's picture

Look on the bright side my American friends. You could be in the shoes of us brits on this side of the pond, at least you don't have fucking nick clegg as one of your representitives. Unfortunately, we fucking do.

If you don't know who he is, google him, a bigger cunt has yet to born. Two faced hypicritical bastard. He's on a par with the one eyed scotch idiot from two years ago fwiw.

Chin up folks, it gets better from here.

Thu, 05/17/2012 - 08:18 | 2434644 Al Gorerhythm
Al Gorerhythm's picture

So, you haven't has the misfortune of aquainting yourself with Australia's Wayne Swan then? You'll need a bigger bucket.

Thu, 05/17/2012 - 08:29 | 2434683 Inthemix96
Inthemix96's picture

Al, do all these serial politicos come from a fucking factory?

Same old same old no matter where we are eh?

Time for some change methinks. And on serious note, never heard of your fella there, but take my very experienced word here, nick clegg is a cunt in a suit, he leaves marks wherever he goes.

Thu, 05/17/2012 - 09:02 | 2434794 Al Gorerhythm
Al Gorerhythm's picture

Then Wayne is the mark.

Thu, 05/17/2012 - 09:10 | 2434815 Hulk
Hulk's picture

I call your Nick Clegg and raise you one Nancy Pelosi...

Thu, 05/17/2012 - 09:14 | 2434823 Inthemix96
Inthemix96's picture

Done hulk,

I'm playin for keeps here mind, so I'll raise with gordon brown AND jeremy hunt.

Thu, 05/17/2012 - 10:42 | 2435408 Hulk
Hulk's picture

Ok, you're in for it now.


I CALL your Gordon Brown and Jeremy Hunt, AND raise you George Bush squared AND Barack Obama !!!



(Hint: you can't)

Thu, 05/17/2012 - 08:30 | 2434686 Monedas
Monedas's picture

5% of the people in bank lines are just there because they think the bank is giving toasters for opening an account with a minimum $100 or an automatic direct deposit !    The Spanish word for a run is "Corrida" (bull fight terminology)....when the money runs may get an ear or a tail !     Monedas   1929     Comedy Jihad Slow Motion Deja Vu Crash

Thu, 05/17/2012 - 08:30 | 2434688 MoreNails
MoreNails's picture

The ECB is the only CB that's not outright purchasing everything in sight and burying it with a sign "don't worry about mark-to-whatever, we got this" on top.

Strip the mark-to-market rules for EU banks. Buy ***loads of government paper. Just as everyone else does. The unlimited lending to banks while they have to "recapitalize" (=deleverage) is useless.

Why the Euro heads are sticking to this "virtuous virgin" stance is beyond me.

Thu, 05/17/2012 - 08:37 | 2434706 smb12321
smb12321's picture

The biggest joke is on the central banks.  What started as a brief, quick fpray (buying debt in trouble times) has evolved into the absurd situation where foreign buyers are vanishing  leaving only central banks as buyers of sovereign debt.  The EU's trick - "lending" banks Euros on the proviso they buy sovereign debt - is about as intellectually dishonest as it gets = especially when they keep sniveling they are not "intervening".

Talk about a snake eating its tail.

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