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S&P Downgrades EFSF From AAA To AA+, May Cut More If Sovereign Downgrades Continue
And so the latest inevitable outcome of the French downgrade from AAA has arrived, after the S&P just downgraded the EFSF, that pillar of European stability, from AAA to AA+. S&P adds: "if we were to conclude that sufficient offsetting credit enhancements are, in our opinion, not likely to be forthcoming, we would likely change the outlook to negative to mirror the negative outlooks of France and Austria. Under those circumstances we would expect to lower the ratings on the EFSF if we lowered the long-term sovereign credit ratings on the EFSF's 'AAA' or 'AA+' rated members to below 'AA+'." In other words, as everyone but Europe apparently knew, the EFSF is only as strong as the rating of its weakest member. And now the rhetoric on how AAA is not really necessary for the EFSF, begins, to be followed by AA, next A, then BBB and finally how as long as the EFSF is not D-rated all is well.
From S&P:
European Financial Stability Facility Long-Term Ratings Cut To 'AA+'; Short-Term Ratings Affirmed; Outlook Developing
Overview
- On Jan. 13, 2012, we lowered to 'AA+' the long-term sovereign credit ratings on two of the European Financial Stability Facility's (EFSF's) previously 'AAA' rated guarantor member states, France and Austria.
- The EFSF's obligations are no longer fully supported either by guarantees from EFSF members rated 'AAA' by Standard & Poor's, or by 'AAA' rated securities. We consider that credit enhancements sufficient to offset what we view as the reduced creditworthiness of guarantors are currently not in place.
- We are therefore lowering our long-term issuer credit rating on the EFSF to 'AA+' from 'AAA'. We are also affirming the 'A-1+' short-term rating on EFSF.
- The outlook is developing, which reflects that we could raise the EFSF's long-term rating to 'AAA' if we see that additional credit enhancements are put in place, but also the likelihood that we could lower the rating further if we conclude that the creditworthiness of the EFSF's members will likely be further reduced over the next two years.
Rating Action
On Jan. 16, 2012, Standard & Poor's Ratings Services lowered the 'AAA' long-term issuer credit rating on the European Financial Stability Facility (EFSF) to 'AA+' from 'AAA' and affirmed the short-term issuer credit rating at 'A-1+'. We removed the ratings from CreditWatch, where they had been placed with negative implications on Dec. 6, 2011. The outlook is developing.
Rationale
When we announced the placement of the ratings on the EFSF on CreditWatch on Dec. 6, 2011, we said that, depending on the outcome of our review of the ratings of the EFSF's guarantor member sovereigns, we would likely align the issue and issuer credit ratings on the EFSF with those of the lowest issuer rating we assigned to the EFSF members we rated 'AAA' (as of Dec. 6, 2011), unless we saw that sufficient credit enhancements were in place to maintain the EFSF rating at 'AAA' (see "European Financial Stability Facility Long-Term 'AAA' Rating Placed On CreditWatch Negative," published Dec. 6, 2011).
On Jan. 13, 2012, we announced rating actions on 16 members of the European Economic and Monetary Union (EMU or eurozone; see "Standard & Poor's Takes Various Rating Actions On 16 Eurozone Sovereign Governments," Jan. 13, 2012). We lowered to 'AA+' the long-term ratings on two of the EFSF's previously 'AAA' rated guarantor members, France and Austria. The outlook on the long-term ratings on France and Austria is negative, indicating that we believe that there is at least a one-in-three chance that we will lower the ratings again in 2012 or 2013. We affirmed the ratings on the other 'AAA' rated EFSF members: Finland, Germany, Luxembourg, and The Netherlands.
Following the lowering of the ratings on France and Austria, the rated long-term debt instruments already issued by the EFSF are no longer fully
supported by guarantees from the EFSF guarantor members rated 'AAA' by Standard & Poor's, or 'AAA' rated liquid securities. Instead, they are now covered by guarantees from guarantor members or securities rated 'AAA' or 'AA+'.
We consider that credit enhancements that would offset what we view as the now-reduced creditworthiness of the EFSF's guarantors and securities backing the EFSF's issues are currently not in place. We have therefore lowered to 'AA+' the issuer credit rating of the EFSF, as well as the issue ratings on its long-term debt securities.
Outlook
The developing outlook on the long-term rating reflects the likelihood we currently see that we may either raise or lower the ratings over the next two years.
We understand that EFSF member states may currently be exploring credit-enhancement options. If the EFSF adopts credit enhancements that in our view are sufficient to offset its now-reduced creditworthiness, in particular if we see that once again the EFSF's long-term obligations are fully supported by guarantees from EFSF member-guarantors rated 'AAA' or by securities rated 'AAA', we would likely raise the EFSF's long-term ratings to 'AAA'.
Conversely, if we were to conclude that sufficient offsetting credit enhancements are, in our opinion, not likely to be forthcoming, we would likely change the outlook to negative to mirror the negative outlooks of France and Austria. Under those circumstances we would expect to lower the ratings on the EFSF if we lowered the long-term sovereign credit ratings on the EFSF's 'AAA' or 'AA+' rated members to below 'AA+'.
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Herman von Rumpoy and his unelected fascist comrades have just been kicked in the groin
Right to the chuckies Chip.
Gold in terms of Dollars is going to get beat. BTD!
Socialism at work.
Everybody shares and shares alike, in the names of fairness and social justice.
Fascists? Sociliasts? Kleptos? make up yor minds, guys and gals......
Who will be the weakest link?
I heard Ransquawk soundbite today, something about Finland not signing up to the fiscal compact.. was i mistaken?
{EDIT}
here is a link to Finish foreign minister saying bad things about it...
http://www.monstersandcritics.com/news/business/news/article_1685852.php/Finnish-foreign-minister-slams-draft-eurozone-discipline-pact
If you bought in euro's your going to make a killing
AAA to AA is really no big deal. You folks need to relax. Maybe y'all should book an Italian cruise.
Are you trying to sell this crap or what?
Anonimous Alcoholics.... Nothing else to add....
How many tripple A countries are left in the world anyhow?
It's one thing if you're a pirate, a cut from AAArrrrr to AArrr is still serviceable. Once you get into the Bs though, you just sound cold. BBBrrrrr!
Substandard & Pisspoor strikes again!
Why didn't they do this Friday or should I say who did they buy 48 hours for?
Strange indeed, normally this kind of info comes at option expiration....
No deja vu here....
for a second I read the headline:
S&P Downgrades ITSELF...
They're socialists not fascists. But one thing is for sure, they're shits.
actually it's a heady mix of Europes usual scum, from socialists to Marxists, fascists to progressives
you can bottle them all in a drum marked 'Parasites' for ease of use if you like
but hurry up, the Sell-by-Date of this toxic brew from Brussels approaches (go Short popcorn)
They may be technically different, but the end result is the same. The majority uses radical authoritarianism to take away the freedom of the individual in the name of the greater good.
Jan. 16, 2012, 4:09 p.m. EST
Eurogroup reacts to downgrade of EFS
NEW YORK (MarketWatch) -- Standard & Poor's downgrade of the European Financial Stability's credit rating will not reduce the bailout fund's lending capacity of 440 billion euros, the Eurogroup said Monday. "EFSF has sufficient means to fulfill its commitments under current and potential future adjustment programs and will continue to be backed by unconditional and irrevocable guarantees by euro-area member states," said a statement released by the Eurogroup, and attributed to its president, Jean-Claude Juncker
http://www.marketwatch.com/story/eurogroup-reacts-to-downgrade-of-efs-2012-01-16?link=MW_home_latest_news
TIMBERRRRRRRRRRRRRRRR!!!!!!!!!
StAA+bility
God forbid S&P ever rates the US Treasury Debt based on the US taxpayers that co-sign for the loans.
The EFSF has been cut
Poor Europe is still in a rut
Mr. Rompuy
Will need a new ploy
For Kleptos to cover their butt
You've got talent
Long live the Limerick King!!!
WTF is with this convergence with reality?
Or not? SPX futures up to 1291 @16:30 GMT.
..or Bull trap by those in the know?
One morning 'KABOOM'
Hope it's soon.
I'm so short I have to reach up to use the keyboard.
Instant hilarity. Thanks!
ori
I was wondering the same thing. Who the heck is buying SPX futures at 1291? Especially since this isn't the only bad news lately. Weak retail sales in December. Mosgt earnings reports contain some bad news like fourth quarter sales down or expected sales reductions for 2012.
And so it begins, yet the main feature has not even been produced yet. That will be an Oscar winner. And we all know who will be starring in that block buster.
S&P again trying its best to manage and steer the EU in the right direction, which is of course full monetization of anything that moves or remotely resembles bank paper.
Blank paper?
Already expected. Priced in
Priced in!
You forgot... BULLISH!
Moody's ratings board; Obama and Sarkos on line 1.
it seems the market doesn't care - downgrade, greek default, ... stocks want to go higher. funny thing.
It's called hyperinflation foreplay. Stock market also rallied in Zimbabwe. And it's not funny.
The same in Belarus¡
:)
Scary part is we're not Zimbabwe, a few farms and a couple cities.
If it is going to be hyperinflation, The foreplay should make paper wealth skyrocket for a time, I agree. the interesting thing to me is that it will attract investment to the US (USD strength), wihich might initially hit gold in $ terms. If one could time the shift from paper equity to physical gold, one might fair quite a bit better than just riding it out in the physical. How long does this foreplay go on? How strong does USD get? In terms of the DX/Y? Any thoughts?
HFT + Baghdad Bob-style propaganda = flat market on news of major European downgrades
Seems legit.
Begging for a massive QE:
"...we could raise the EFSF's long-term rating to 'AAA' if we see that additional credit enhancements are put in place,...."
Keep dreaming,¡:)
New weekly 'ESFS's', since this one is already all sopped up faster than sausage gravy at a truck stop.
ESM is not AAA neither....
fucking S & P....where the fuck were they back in 2007, 8 and up to now...i want them hung just like the bitch made bankers...
this one notch at a time shit is just more bullshit smoke and mirrors...until all the bankrupt countries including broke ass america are rated junk, they need to just shut the fuck up.....
UNITED KINGDOM IS A
HONG KONG IS A
The UK needs another Cromwell. Could Farage rise up to the occasion?
Banking apologist. Wise up son.
Guy Fawkes had the wrong target.
Parliament doesn't countrol England.
'UNITED KINGDOM IS A' COLOSSAL TURD.
Corrected at no charge.
It's priced in.
Seems to me S&P has been given the go-ahead to downgrade everything, then when it collapses one overnite, they can say 'Hey dont look at us, we told ya so, didnt you get the downgrades news?'.
I wouldn't even begin to entertain the thought that it is not timed/coordinated. S&P nudging the system towards something... guess we will find out pretty soon.
Equities are well-positioned for hyperinflation. When prices skyrocket businesses are collecting so much more money.......... right? right?
/sarc
"And now the rhetoric on how AAA is not really necessary for the EFSF, begins, to be followed by AA, next A, then BBB and finally how as long as the EFSF is not D-rated all is well."
In a state of war, you are a fool if you follow the propaganda of the enemy
Funny how they push the market higher on trying to convince retail that it's not bad news.
Hmmm, quick let's think of something... maybe if Luxembourg buys zillions of its own bonds it could use them as collateral against an IMF loan to sterilize Italian bonds bought by the ECB on the secondary market?
Vomiting into a bowl and then drinking it back up is no way to solve an economic crisis, son.
Now stop that you. Don't give them more ideas. Oh,wait... that's actually not that far from what they're already doing.
Right, than! Carry on.
Watch Bernank shovel ever-growing piles o' trillions at Europe. Watch the main stream media ignore the crucifixtion of american children as they are turned into Wall Street debt slaves for the greater good of Obama's reelection. Watch the main stream media as they fail to ask Romney-stooge, even once, what he would do to stop the Fed's unpopular, un-voted-on bailout of Europe. Watch as the pitiful remnants of the American standard of living are flushed down the toilet.
Our only hope is that the Germans give up before we do, and leave the Euro. Then Bernank's Euro bailout will be seen as throwing good money after bad, a mistake. The MSM will say "Never mind."
Wow more confirmation 'all is well' I guess....NAH nothin bad can happen from here on out as they have 'market drops' fixed and that wont happen any more....they call these here the 'Salad Days'....sure believe that.
Unfortunately for S&P, no one cares what they´re doing/saying. They lost their credibility long ago.
Oh and allow me
U.S. vs E.U. WAR, bitchez ...
'War cancelled due to 'budget problems'....ZH this morning.
Budget problems is what will lead us to war! When facing hyperinflation v's rallying the populous against a "common enemy", you know which they will choose!
We wont get a slow market melt down....at this point, one morning it will all just be closed, funds unavailable.
Dow 36 thousand....
....milk $98.45/gal....
yep, u betcha'...
that's what all the Silver's for...
SPARTA!!! S&P Bitchez!
Dow gap up Tuesday now sure thing.
Buy now! Gotta be first in line.
It's easy to do when bad news is put out while the robots are in hibernation mode.
Basically, a 3-year "Bloodbath" for the both stock market and Treasury Market bears.
Never before in history has a market shaken off so much bad news.
Never before has fixed income performed well along U.S. stocks.
Strongest tape I've seen since 1995.
Bears are getting a lesson on the "Power of Paper and Infinite Fiat".
You aint seen nothing yet, the show hasnt even started. Ready for a nice -800 DOW open one morning soon?
Naw, it's all priced in. Everything is fine. Mother Fuckin' Global only stole seperate accounts, Europe has to bail itself out every week and only because the ed prints on the back of the US taxpayer to do FX swaps, Iran is surrounded, China's economy is crashng, and Americans still would rather watch football than consider reality. What could go wrong?
Dogs and cats living together?
A giant marshmallow man walking the streets of NYC?
Cruise ship Captains running aground and sinking 500 feet offshore?
Nah. Everythings better than it was 10 years ago. Bis Sis says so, and I believe her because I don't want my world view to change, or get indefinitely detained.
I'm afraid Robot's bra is too tight
With blood loss affecting his sight
His sniffer's jammed too
For he can't smell the poo
That shoots from his mouth left and right
Well done maestro +10
So, you mean that he has a rare anomaly where the ophthalmic artery is a direct branch of the mammary artery, doc? Sure, would explain some things.
When I see Robotrader's post, I usually click the down arrow first, and then I read it after. Always worked.
Give this man a Pulitzer and a Duff Beer!
Any limerick about Robo should start out with "Hickory Dickory Dock"
"Never before in history"?
Are you fucking retarded? This happens in ~100% of all hyperinflationary markets.
Stop pretending like this is something special.
AND NOW WHAT?!
DISCO!
I think it's pretty clear now....
There's only one thing we can do....
We'll have to... Invent.... Another name for it and sell it to the public again!
All ABOARD! Calling all the last of the suckers, I mean 'investors'...all ABOARD the 'New Normal Express' dont ya know its all up from here!
I was just wondering if a collection of Ronaldo's once used jock straps would be considered AAA rated securities for the purposes of EFSF? It's just a thought... but it just might be the missing link... :)
EFSF stinks of death.
What's the point in continueing with this bullshit? There's onle one way it can go, so why piss around?
They make me sick. There's only the elite benefit from this - at ever greater (and longer) expense to the ordinary guy.
So buy some silver or gold and take away the Fiat Ponzi's leverage....
And if you do, keep it up.
Indeed, what the hell is the point? There is none!
The point is so that they share out the blame among such a large group of assholes, who each did just a little thing, followed by another little thing, that no-one was really to blame.
Accumulate and trade PMs for your labor and services then, before it is illegal. So long as everyone accepts the construct and uses the system I think you fail to realize that an imaginary financial system is only limited by one's imagination, so I would tend to disagree and simply say there are numerous "ways this can go".
All you can do is hedge accordingly.
All my savings are in physical PMs
mine too
Didn't know you could buy 1/256th oz of gold ;)
S&P has found religion. You can't build a AAA synthetic from Alt-A assets when they're correlated, Glad they have that straightened out. Should be a Nobel prize in there for someone.
So what is the point then, make everybody "Z". The entire system needs a reset. Fuck all these paper pushing fucknuts. Possession is rapidly becoming the law. Fine with mine.
sure you can, that's what tranching is for.
Lol at least the Europeans can breath a sigh of relief. We are not so fortunate as to brag with a bunch of stooges named Obama, Geithner and Bernanke hehe. How you managed to put these three in charge of your destiny is beyond me.
So you think the ball is back in our court now? That should be interesting....I guess they can float more rumors of QE3 for the retards.
Until proven otherwise, most Central Bankers belong in the incompetent cathegory, but ole Benny has set the standards for rock bottom. But then again he isn't that foolish, he is only so smart as to be able to fool a whole nation. What the US needs is a revolution, and that is what you would get if only your rates went up a few percent. Your nation is trapped in a zero rate inflation economy bubble, and Ben has grabbed you by the balls. Yeah, a revolution is what you need to rid yourself of your masters. In Europe, at least we are trying to put together structural reforms as to avoid the mess you are in. Ofcourse it will be painful and messy. The US aren't making it easy for everyone either, inflating and exporting their bubbles everywhere, but let's hope that things will change, for the sake of your future and your children. Wiping out the prosperity of a whole middle class shouldn't go on unpunished.
EFSF = Epic Fail Sovereign Failure
repalce "fail" with fucking and i think you may have soemthing...oops..
The price of stocks, gold, oil, and other commodities could get creamed in the near future. All those trading or holding such assets should be very careful in the next 6 months to a year. Watch the dollar.
Try explaing your thoughts instead of just giving your opinion.
Here, I'll go first....and just so you know, I don't agree with much in this article, except that supply is low. But it isn't low because OPEC is cutting supply. It's because they don't have the oil to supply. Peak oil bitchez.
Why oil prices will stay high:
http://globalpublicsquare.blogs.cnn.com/2012/01/15/zakaria-why-oil-prices-will-stay-high/
If the dollar weakens the gold bugs, peak oilers, commodity hoarders, and stock floggers will be happy. If the conventional wisdom is wrong and the dollar goes up instead of down they will be sad. Was working on the worst case/contrarian part of my plan today and saw some ugly things if the dollar goes up. Just thought I'd warn those who have an ear to hear. TIFWIW
What happened in AUgust? Dollar was up and so was gold.
Yeah I'm sure the dollar is abouit to rally so hard that granny will be able to pay off her reverse mortgage with next months social security check and still have money left over to double her rations of catfood &play a few extra bingo cards...
The benevolent Bernank... always looking out for granny...
No crisis - all priced in.
that ship that tipped over is a metaphor for what is about to happen! captain and crew abandon ship first, the rest, well.......
I saw an interview, the cap'n and crew were telling people to stay onboard, as they were leaving....LOL total symbolism here.
The Germans are a proud people and will ultimately make the right decision in their own national interest - and ultimately not take themselves down the road of financial collapse supporting the likes of Greece, Italy and Portugal.
As I am writing this post, I am looking at a mounting that I have here in my office on my wall - it is of a series of 20 breadline tickets that were used in a breadline in Munich in 1920. I have this on my wall along with a mounting of 6 Zimbabwe notes ($1 through to $100,000,000,000,000) as a reminder to my children of the incompetence of government.
The collapse of Greece and the subsequent collapse that will follow will be written about for centuries in the future, mostly in Mandarin of course...
I have some banknotes as well (even a 1¢ note from 2006 while the $10^14 note was, just three years later, from 2009. Not even mentioning the 10 zeros they kicked off those bills (it's really 10^24)). Funny thing is that some Zimbabwians still keep piles of them under their beds because Mugabe promised them (or at least they believe so) they would one day be able to exchange them again.
People only get the leaders they deserve I guess. Same thing goes for us.
PS. don't wory about speaking Mandarin. China is the lagest exporter of goods but what happens when we can't buy their stuff anymore?
The Chinese are just as bad at it.
But the difference is that they will probably starve their population if they can't feed them on diluted FIAT.
Do you seriously trust any financial information coming from China?
The Chinese invented paper money
All of the markets, banks, etc. are starved for liquidity...fresh blood. So TPTB have to decided to melt the markets up, hoping and praying that John Q, and sidelined capital will come running...all afraid of missing the bull express(all aboard...tickets please,) The Sucker Flyer is pulling out...non-stop service to...well, you know the rest...
How much does John Q. have at this point to come running in with....a couple hundred bucks maybe? Pumpin a dry well here.
I don't disagree SheepDog, it shows how desparate they really are...no one for the bots to play with.
Anyone buying into this market right now will get exactly what they deserve. That is an overnight down 8-900 Dow points and that might just be conservative.
AA+ is the new AAA
Re S&P Downgrades EFSF From AAA To AA+, May Cut More If Sovereign Downgrades Continue
Uughhh? Sounds a bit circular to me - S&P may have to further downgrade HERE if it keeps downgrading THERE...
Well, that's a sweet one. Can we downgrade the FED next, they deserve it.
"We all die, deservin's got nothing to do with it..." --William Munny, "Unforgiven"
Gee, when they're downgrading your bailout fund, you might have a problem.
Maybe they'll create an EFSFSF and have that sucker float some bonds. I'm sure no one will realize there's a connection.
Just combine all stabilisation funds like some kind of CDO, makes them safer right? Rate AAA and sell that shit lol.
OK boys (and girls and roboTrader).. That was fun, but now for real.
This is next step in non-violent (so far) removal of euopean "leaders" - this is Sarkozys turn. Just check french socialist opposition rhetoric.
But! Who is next?
(no, not Cameron...)
Something very fishy is going on at the EFSF.
http://www.efsf.europa.eu/investor_relations/disclaimer.htm
"You are requested to ensure that you are legally authorized to access this site in the country from which you are making the Internet connection. By clicking "I agree " below, you represent that you are not physically present in the United States of America."
What no-one from America is allowed to look at the investor relations on the EFSF website ?
Is the ECB secretly buying bonds to make the French, Italian, and Spanish debt auctions successful? Is there a way to determine this?
Did the Fed crash the markets in 2008?
funny these rating companies; Moody goes one way S&P the other; rumour flying that their competition makes them paranoid, and subjective. Awesome twist to market ethics, if its true. And it is, nobody is as dumb as a notational who never saw Argentina, sub Primes, Lehman or Dexia on their radar. They must all belong to the same family as that Costa cruiser captain, dumb and full of their own importance, and jealous of their primus inter pares status.
Perfect!
Perfect!
Perfect!
Maybe it's just the way my mind works but I'm thinking that one of those ought to look a little more like a butt plug... a large one. (It's not what you think; I've seen too much bad contempory installation art.)
Who cares?
It's almost as if the governments (and by "governments" we mean the ZOGs) themselves decided in 2007 to day trade and clean everyone out with perfectly timed tape bombs planned well in advance and released at times to do the most possible damage to open interest.
No. That's just crazy talk
haha, so if the S&P continues to downgrade the EU countries then they will have to downgrade the EFSF. Circular logic prevails. If they just stop downgrading then everything is fine
I wish I could see marios face when this was announced.
I had forgotten about the Efsf. Seriously it is dead.
HA..HAHAHAHAHA....HAHAHAHAHAHAHAHAHAHAHA!!! What a flippin joke!
The EU economy is mathematically fucked.
Policy decisions can't even provide a solution any longer.
Just a case of waiting for the inevitable.
"And now the rhetoric on how AAA is not really necessary for the EFSF, begins, to be followed by AA, next A, then BBB and finally how as long as the EFSF is not D-rated all is well." The only things I can think of in life that are D-rated and still good are D-cups...
Didn't they rate subprime CDO's AAA right before those lost 80% of their value? How do they have any credibility left?
S&P have just made the whole credit rating business a fucking joke - nobody cares anymore...