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S&P Cuts Spain to BBB+, Outlook Negative

Tyler Durden's picture




 

Adding insult to Bayern Munich injury, we just got S&P which did the impossible and cut Spain to BBB+ from A (outlook negative) not on Friday after hours. Kneejerk reaction is a 30 pip drop in EURUSD. Oh, and most amusing, those witches among men, Egan Jones, downgraded Spain from BBB to BBB-.... a week ago. Crush them, destroy them... How dare they be ahead of the pack as usual: after all their NRSRO application was missing a god damn comma.

Full release:

  • We believe that the Kingdom of Spain's budget trajectory will likely deteriorate against a background of economic contraction in contrast withour previous projections.
  • At the same time, we see an increasing likelihood that Spain's government will need to provide further fiscal support to the banking sector.
  • As a consequence, we believe there are heightened risks that Spain's net general government debt could rise further.
  • We are therefore lowering our long- and short-term sovereign credit ratings on Spain to 'BBB+/A-2' from 'A/A-1'.
  • The negative outlook on the long-term rating reflects our view of the significant risks to Spain's economic growth and budgetary performance, and the impact we believe this will likely have on the sovereign's creditworthiness.

NEW YORK (Standard & Poor's) April 26, 2012--Standard & Poor's Ratings Services today said it lowered its long-term sovereign credit rating on the Kingdom of Spain to 'BBB+' from 'A'. At the same time, we lowered the short-term sovereign credit rating to 'A-2' from 'A-1'. The outlook on the long-term rating is negative.

Our transfer and convertibility (T&C) assessment for Spain, as for all European Economic and Monetary Union (EMU or eurozone) members, is 'AAA', reflecting Standard & Poor's view that the likelihood of the European Central Bank (ECB) restricting non-sovereign access to foreign currency needed for debt service of non-euro obligations is low. This reflects the full and open access to foreign currency that holders of euro currently enjoy and which we expect to remain the case in the foreseeable future.

The downgrade reflects our view of mounting risks to Spain's net general government debt as a share of GDP in light of the contracting economy, in particular due to:

The deterioration in the budget deficit trajectory for 2011-2015, in contrast with our previous projections, and

The increasing likelihood that the government will need to provide further fiscal support to the banking sector.

Consequently, we think risks are rising to fiscal performance and flexibility, and to the sovereign debt burden, particularly in light of the increased contingent liabilities that could materialize on the government's balance sheet.

These concerns have led us to conclude a two notch downgrade is warranted in accordance with our methodology (see "Sovereign Government Rating Methodology And Assumptions," June 30, 2011).

Under our revised base-case macroeconomic scenario, which we view as consistent with the downgrade and the negative outlook, we have lowered our forecast for GDP to contract in real terms by 1.5% in 2012 and 0.5% for 2013. We had previously forecast real GDP growth of 0.3% in 2012 and 1% in 2013.

We believe that negative drags on GDP include:

Declining disposable incomes;
Private-sector deleveraging;
Implementation of the government's front-loaded fiscal consolidation plan; and
The uncertain outlook for external demand in many of Spain's key trading partners.

In our opinion, the Spanish economy is rebalancing, and the measures the government has taken should facilitate this process. Spain's current account deficit (CAD) is on a narrowing trajectory, significantly supported by the Spanish economy's strong export performance, especially since 2009. The CAD was 3.5% of GDP at year-end 2011, compared with 10.0% in 2007. Excluding the income deficit, the current account is in balance. The income deficit, which reflects net interest and dividend payments on Spain's net liabilities to the
rest of the world, widened in 2011 on the back of increased external funding costs. We expect the current account to broadly balance in 2013-2014, before posting a higher surplus thereafter. In contrast to 2008-2010, the Bank of Spain--through Target2 overdrafts with the ECB (exceeding €250 billion in March 2012, from around €150 billion at the end of 2011)--has now become the major source of financing Spain's CAD. In our opinion, this reflects the extent to which Spain's commercial banking system has sharply increased its
dependency on official funding sources to a considerably higher level than we anticipated in January, when we last revised our rating on Spain (see "Spain's Ratings Lowered To 'A/A-1'; Outlook Negative," Jan. 13, 2012).

Despite the unfavorable economic conditions, we believe that the new government has been front-loading and implementing a comprehensive set of structural reforms, which should support economic growth over the longer term.

In particular, authorities have implemented a comprehensive reform of the Spanish labor market, which we believe could significantly reduce many of the existing structural rigidities and improve the flexibility in wage setting.  Even if, in our opinion, the reform is unlikely to eliminate the structural duality in the Spanish labor market, we believe it will ultimately benefit employment growth once a sustainable recovery sets in. In the near term, increased labor market flexibility is likely to accelerate the necessary wage adjustment and reduce the pace of job-shedding. At the same time, we do not believe the labor reform measures will create net employment in the near term.
As a consequence, the already high unemployment rate--especially among the young--will likely worsen until a sustainable recovery sets in.

Financial sector reform, announced in February 2012, requires banks to allocate additional loan loss provisions and raise capital buffers on exposure to real estate developments and construction projects. We believe these sectors will continue to be the main sources of asset quality deterioration. The reform has also led to further banking sector consolidation. Recent acquirers have benefited from asset protection schemes, with potential losses covered by a partial (80%) guarantee provided by the Deposit Insurance Fund to absorb future credit losses from the acquired banks' legacy portfolios. We estimate that the guarantees related to these schemes, combined with those
that will likely be provided in the upcoming sale of three entities currently controlled by the Fondo de Reestructuracion Ordenada Bancaria (FROB),represent a contingent liability for the sovereign in the amount of about 3.75% of GDP. Combined with embedded risks in the rest of the banking sector, public enterprises, and other state guarantees, we now estimate contingent fiscal risks to the sovereign as moderate, as defined in our criteria (see "Sovereign Government Rating Methodology And Assumptions," published June 30, 2011).

We believe the ECB's recent long-term repurchase operations (LTROs) have significantly reduced the risks the Spanish banking sector faced in refinancing its medium-term external debt and its short-term interbank liabilities maturing in the first half of 2012. The LTRO also helped banks to finance their government debt portfolios cheaply. Nevertheless, we do not view the provision of liquidity support by the monetary authorities as a substitute for financial sector restructuring and economic rebalancing.

In our view, the strategy to manage the European sovereign debt crisis continues to lack effectiveness. We think credit conditions, and hence the economic outlook for Spain, could now deteriorate further than we anticipated earlier this year unless offsetting eurozone policy measures are implemented to support investor confidence and stabilize capital flows with the rest of the world. Such measures at the eurozone level could include a greater pooling of fiscal resources and obligations, possibly direct bank support mechanisms
to weaken the sovereign-bank links, and a consolidation of banking supervision or a greater harmonization of labor and wage policies.

In light of the rapid rise in public debt since 2008, we expect the Spanish government to implement a sustained budgetary consolidation effort--includingstrengthening fiscal surveillance frameworks at the regional government level--aimed at gradually reducing the government's net financing needs.

Balancing this commitment to stabilizing public finances with policymakers' clear interest in preventing an acceleration of the economic downturn will be challenging in the absence of fiscal transfers from abroad, or private-sector credit creation at home. At the same time, we believe front-loaded fiscal austerity in Spain will likely exacerbate the numerous risks to growth over the medium term, highlighting the importance of offsetting stimulus through labor market and structural reforms.

Following budgetary slippage of 2.5% of GDP in 2011 beyond the 6.0% target, the government has committed to a target of 5.3% of GDP in 2012 and 3.0% in 2013. In our opinion, these targets are currently unlikely to be met given the economic and financial environment. We forecast a budget deficit of 6.2% of GDP in 2012 and 4.8% in 2013 (our previous forecasts were 5.1% and 4.4%). We also believe the delay to adopting the 2012 budget could reduce the government's capacity to prevent deviations from its budget plans.

Given the significant and regular budgetary slippages at the regional level-–the main contributor to the deviations from the government's
targets--the national government's willingness to fully enforce its new budget will likely be tested as we expect the regions to post a shortfall of around 0.4% of GDP in 2012, above their 1.5% of GDP 2012 target. Because of  higher-than-previously-expected deficit projections, and other debt-increasing items such as arrears resolutions (estimated at 3.9% of GDP in 2012), we forecast net general government debt at 76.6% of GDP in 2014, against our previous projection of 64.6% of GDP. State guarantees to the European Financial Stability Fund, the European Stability Mechanism, and the Electricity Deficit Amortization Fund, which are included in the government's own debt projections, are not part of our debt estimate and are instead classified with other state guarantees.

In line with the increasing risks we see to Spain's recovery, we have also considered a downside scenario that, if it were to eventuate, could lead us to lower the ratings again. This downside scenario assumes a deeper recession in Spain this year, as a result of weaker external and domestic demand, with real GDP declining by 4% in real terms, followed by a contraction of 1% in 2013 and a weak recovery thereafter. Under this downside scenario, the current account would adjust faster, but the general government deficit trajectory would
deteriorate further. The net general government debt ratio would breach 80% of GDP. For details for all our scenarios, see our analysis on Spain.

The negative outlook reflects our view of the significant external and domestic risks to Spain's economic growth and budgetary performance, and the impact we believe this may have on the sovereign's creditworthiness.

We could lower the ratings if we were to see a rise in net general government debt to above 80% of GDP during 2012-2014, reflecting fiscal deviations, weakening growth, or the crystallization of contingent liabilities on the government's balance sheet beyond our current projections. We could also consider a downgrade if political support for the current reform agenda were to wane. Moreover, we could lower the ratings if we see that Spain's external position worsens or its competitiveness does not continue to approach that of
its trading partners, a key factor for Spain to return to sustainable economic and employment growth.

We could revise the outlook to stable if we see that risks to external financing conditions subside and Spain's economic growth prospects improve, enabling the net government debt ratio to stabilize below 80% of GDP.

 
 

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Thu, 04/26/2012 - 17:08 | 2378075 Death and Gravity
Death and Gravity's picture

"Spain Cuts Spain to BBB+, Outlook Negative"

WE ARE ZE ELITE ZUIZIDE ZQUAD!

Thu, 04/26/2012 - 17:12 | 2378100 Unprepared
Unprepared's picture

http://www.zerohedge.com/news/spain-cuts-spain-bbb-outlook-negative

For the ones wondering. Welcome to Fight Club bitchez

Thu, 04/26/2012 - 17:20 | 2378135 Hard1
Hard1's picture

Olé! Bitchez.  CDS already indicates true rating is around CC. Rating agencies irrelevant nowadays. Probably bullish news actually.

Thu, 04/26/2012 - 18:16 | 2378365 trebuchet
trebuchet's picture

of course its bullish, more REAL money pumping into spain in gross fixed cap formation last time i checked, euro down good for exports - more cabbages and lettuce coming out of spain than ever before, pressure on banks to knock heads and get their asets sorted and get the euro crap fixed, while rajoy brings the regions into line

monetary policy via the the exchange rate transmission channel is the only one thats been working for last 3 years.... coz its the only one they dont control, despite best CB coordinated efforts

 

Thu, 04/26/2012 - 19:32 | 2378596 gjp
gjp's picture

Bullish for America anyway, and does anything else matter?

Just more American rating agencies imposing discipline on the est of the world while at home america runs up the biggest bad debt in the world to support endless consumption and insane speculation in narcissistic unproductive crap like social networking and tech toys.

What a sick joke.

Thu, 04/26/2012 - 18:30 | 2378422 SheepDog-One
SheepDog-One's picture

Watch out for Spaniards with sharp objects, they'll CUT ya, bitch!

Thu, 04/26/2012 - 18:41 | 2378454 Rubbish
Rubbish's picture

Soon we will have 7 billion people standing around looking at each other questioning, "are you paying?" "I'm not paying" "are you paying?" "not me" "are you paying?" "Nope"

Thu, 04/26/2012 - 17:13 | 2378111 wandstrasse
wandstrasse's picture

What does a country have to do or not do to disappear completely from the rating radar?

Thu, 04/26/2012 - 17:18 | 2378138 magpie
magpie's picture

Have a government with a zero deficit/debt rule and  a barter economy ?

Thu, 04/26/2012 - 18:22 | 2378393 Theta_Burn
Theta_Burn's picture

Whatever the fuck they want....

Threaten charges, smear agencies name in the lamestream media as irresponsible/inacurate.

How dare anybody question government sanctioned reports

Your question was touched on a bit a few days ago  http://www.zerohedge.com/news/porn-addicts-formerly-known-sec-take-their-vendetta-egan-jones-next-level

Thu, 04/26/2012 - 21:21 | 2378883 Buck Johnson
Buck Johnson's picture

Egan Jones won't play ball and the govt. was made.  No it seems the S & P 500 won't either.  Spain is done and this happened on a thurday not a friday.  Is this a test to see what the market will do or is it they just don't care anymore and just put it out there.

Thu, 04/26/2012 - 17:17 | 2378131 Reggie Middleton
Reggie Middleton's picture

As was clearly stated last Monday...

The Spain Pain Will Not Wane: Continuing the Contagion Saga:

In the general our analysis Spain public finances projections_033010, the first four (of 12) pages basically outline the gist of the Spanish problem today, to wit here are the first two:

Spain_public_finances_projections_033010_Page_02

 

Thu, 04/26/2012 - 17:18 | 2378140 trampstamp
trampstamp's picture

Reggie, fix your shit

Thu, 04/26/2012 - 17:19 | 2378144 resurger
resurger's picture

Reggie Middleton in the house ....

Thu, 04/26/2012 - 17:20 | 2378146 Darkness
Darkness's picture

You are the best. Thank you for all your hard work. Making sure I short the world, one country at a time. $GLD

Thu, 04/26/2012 - 17:20 | 2378148 fonzannoon
fonzannoon's picture

Where did you draft Spain today Reggie. Come on I thought you were above that crap.

Thu, 04/26/2012 - 17:23 | 2378163 FlyoverCountryS...
FlyoverCountrySchmuck's picture

Well, Spain could OBVIOUSLY solve this problem by taxing the regular economy in to extinction, and replacing it with a sustainable, GREEN ECONOMY!!! (right???)

Oh...

Wait.......

Thu, 04/26/2012 - 18:02 | 2378306 Everybodys All ...
Everybodys All American's picture

Reggie ... you sold out to the darkside.

Thu, 04/26/2012 - 19:12 | 2378540 CrashisOptimistic
CrashisOptimistic's picture

More pimping on someone else's traffic = :(

I'll award you 2 points for longevity, but that doesn't excuse pimping.  Stop it.

Thu, 04/26/2012 - 19:23 | 2378574 The trend is yo...
The trend is your friend's picture

Damn Reggie, has anyone shown you how to use the same damn font

Thu, 04/26/2012 - 18:37 | 2378441 Spooky Polish
Spooky Polish's picture

Who cares ? B is for Bullish 

Fri, 04/27/2012 - 10:11 | 2380066 Ben Burnyankme
Ben Burnyankme's picture

Warms my heart.  Glad S&P is on top of this.  What was Lehman's rating on Sept 15th, 2008?

Thu, 04/26/2012 - 17:10 | 2378080 trampstamp
trampstamp's picture

means nothing nowadays. Good for S&P downgrading though.

Thu, 04/26/2012 - 17:09 | 2378081 Sockeye
Sockeye's picture

Uh oh.

Someone's got some spainin' to do!

Thu, 04/26/2012 - 17:09 | 2378082 Marge N. Callz
Marge N. Callz's picture

More QE! More LTRO! Now if we can just get a horrible GDP figure tomorrow, we can really put the P in Ponzi!

Thu, 04/26/2012 - 18:32 | 2378426 SheepDog-One
SheepDog-One's picture

Right, DOW futures should be up about +250 by open tomorrow on this.

Thu, 04/26/2012 - 17:09 | 2378083 AlaricBalth
AlaricBalth's picture

Hasta la vista, baby!

Thu, 04/26/2012 - 17:10 | 2378084 Josephine29
Josephine29's picture

The Spanish economy continues to weaken and I guess S&P has finally cottoned onto this fact. As the excerpt from the artilce shown below indicates Spain's economy has serious problems.

Services turnover index

The interannual rate of turnover for the Market services sector stands at -1.9% in February, eight tenths lower than that registered in January

However if we take the trouble to look further down the report

After eliminating the calendar effect, that is, the difference between the number of working days in a given month in different years, the interannual variation of the General Index of
Services sector turnover stood at –4.4 in February, more than two points below that registered the previous month.

So the report from thr largest part of the economy is yet again grim if we allow for the extra day. And frankly even if we ignored the extra day’s effect output was lower than a year ago. If we look at the underlying index it is at 85.1 compared to a base of 2005=100.

 

 

http://www.mindfulmoney.co.uk/wp/shaun-richards/spain-should-be-singing-help-or-perhaps-with-a-little-help-from-my-friends/

Thu, 04/26/2012 - 17:10 | 2378087 The Swedish Chef
The Swedish Chef's picture

You did forget the Chelsea insult. Or is Barcelona no longer part of the Kingdom of Spain?

Thu, 04/26/2012 - 17:30 | 2378179 cougar_w
cougar_w's picture

Barcelona is part of the Kingdom of Squid. Or shall be very shortly.

Thu, 04/26/2012 - 20:47 | 2378788 LongSoupLine
LongSoupLine's picture

No, it's just that Real Madrid is the one full of the overpaid pretty boy whiners and pussies.  So glad BM schooled them!

Thu, 04/26/2012 - 17:10 | 2378089 Bay of Pigs
Bay of Pigs's picture

Nobody could have seen this coming. Impossible.

Thu, 04/26/2012 - 17:15 | 2378122 wandstrasse
wandstrasse's picture

thank you. your comment soothes my being shocked, shocked, shocked.

Thu, 04/26/2012 - 23:13 | 2379125 Fish Gone Bad
Fish Gone Bad's picture

Two things will continue, until they don't.  They will continue to make up whatever stories they want and pull another rabbit out of the hat.  Things will continue to get even more fucked up until all the money that important people had at risk is safe.  Then and only then, it will be "Game On!".  Until that day, and it could be tomorow or a year from now, everything will be fine... until it isn't.  That said, this crisis will be unike any other in history.  Everyone, and I mean Everyone, will have seen this one coming (for years), and will still get wiped out.

Thu, 04/26/2012 - 17:11 | 2378093 ekm
ekm's picture

Oh, oh, oh, I feel so bad.

Thu, 04/26/2012 - 17:11 | 2378096 Aunty Christ
Aunty Christ's picture

based on where Spain's cds trade, it should be B+ ( neg outlook)

Thu, 04/26/2012 - 17:11 | 2378101 Conman
Conman's picture

Say this mantra along with me - All news is good news, BTFD!

Then puke, and buy more ammo.

Thu, 04/26/2012 - 17:12 | 2378107 magpie
magpie's picture

ESM bailout  mechanism, new target acquired.

Thu, 04/26/2012 - 17:32 | 2378193 cougar_w
cougar_w's picture

Have locked on swap-line torpedos Captain. Ready to fire ...

Thu, 04/26/2012 - 17:12 | 2378108 Everybodys All ...
Everybodys All American's picture

You mean they didn't wait for a three day week end. Huh. Look if you don't think S&P will not downgrade the US again you are in for quite a wake up.

How's that QE working in Europe? It's not and it's not working here either. Bernanke needs to be removed asap before he does any more long term damage.

Thu, 04/26/2012 - 17:13 | 2378109 scatterbrains
scatterbrains's picture

WTF ?  Where's the SEC damn it? This can't be!

Thu, 04/26/2012 - 17:34 | 2378199 cougar_w
cougar_w's picture

The SEC are still waterboarding Sean Egan. They can only save democracy one terrorist at a time, you know.

Thu, 04/26/2012 - 18:13 | 2378350 carbonmutant
carbonmutant's picture

Couger 'you been filing your claws again...?

Thu, 04/26/2012 - 20:50 | 2378793 LongSoupLine
LongSoupLine's picture

 

 

waterboarding's out...the new (and deeply more inhumaine) torture is a forced listening to Maria Bartiromo's voice.

Thu, 04/26/2012 - 17:13 | 2378112 EscapeKey
EscapeKey's picture

I can barely keep up with all this bullish news. That should be good for 2-300 points on the DJIA at the very least!

Thu, 04/26/2012 - 17:15 | 2378123 resurger
resurger's picture

Weekend Party, Monday Party, Sunday Party, next week Party, A+ Party, BBB+ Party, CCC Party ...

PArty PArty PArty..............

Thu, 04/26/2012 - 17:16 | 2378125 navy62802
navy62802's picture

24 hours until the world explodes. They can't do this on a Thursday afternoon!!!

Thu, 04/26/2012 - 19:59 | 2378664 DeadFred
DeadFred's picture

That is the most curious part, why today??? I doubt that it was random but surely it could have waited until tomorrow. 

Thu, 04/26/2012 - 17:17 | 2378130 H. Perowne
H. Perowne's picture

Inside of Zimbabwe Bennie's head: "Theworsethebettertheworsethebettertheworsethebettertheworsethebetter . . ."

Thu, 04/26/2012 - 17:22 | 2378157 resurger
resurger's picture

i dont know who quoted this "bad news is good news, good news is the best news"

Thu, 04/26/2012 - 17:30 | 2378181 Rainman
Rainman's picture

Here's some more best news.....1-in-10 US mortgages made in the past 2 years now underwater

http://www.reuters.com/article/2012/04/26/us-usa-housing-negative-idUSBRE83P12E20120426

Thu, 04/26/2012 - 17:32 | 2378192 resurger
resurger's picture

Dow to 36K

+1

Thu, 04/26/2012 - 17:21 | 2378141 Squid Vicious
Squid Vicious's picture

will be spun as bullish in time for the US open, somehow...or not, doesn't matter we'll be green

Thu, 04/26/2012 - 17:35 | 2378204 cougar_w
cougar_w's picture

So long as bad news is pushed off the bottom of the Bloomberg terminal by morning, it never happened.

Thu, 04/26/2012 - 17:19 | 2378145 carbonmutant
carbonmutant's picture

S&P is just stalling on following Egan Jones rating on the US...

Thu, 04/26/2012 - 17:39 | 2378215 cougar_w
cougar_w's picture

Well duh. They want to see what happens to Sean Egan first. 

This down-grade business is becoming like a blood sport. Or Russian roulette.

Thu, 04/26/2012 - 18:14 | 2378359 carbonmutant
carbonmutant's picture

Truely...

Thu, 04/26/2012 - 17:21 | 2378153 YesWeKahn
YesWeKahn's picture

SEC will take no time to investigate SP.

 

Thu, 04/26/2012 - 18:18 | 2378374 carbonmutant
carbonmutant's picture

Well if Mary doesn't investigate it will be a clear indication that the downgrade was approved by the WH...

Thu, 04/26/2012 - 19:12 | 2378541 mendigo
mendigo's picture

I suspect they are high-fiving.
We were only taken down one notch so in relative terms our rating is improving. Our government can be righly proud.

I think that sp should expect a visit from Spanish inquisition.

Thu, 04/26/2012 - 17:21 | 2378154 monopoly
monopoly's picture

Now all we need is a BLS print of 0 jobs for April, and unemployment up to 8.7% and within a week DOW will be at 14,000. Nothing to this shit. Cannot lose. Just like 1929. They just kept going up.

Thu, 04/26/2012 - 17:48 | 2378254 EscapeKey
EscapeKey's picture

The birth death model will no doubt be "improved" to send even stronger signs of an improving US economy.

Just like the CPI will be "improved" through chained nonsense. Funny how inflation is never underestimated in Keynesian mindset.

Thu, 04/26/2012 - 17:22 | 2378158 Platinum_Investor
Platinum_Investor's picture

Better not downgrade the US again as the SEC is just waiting to press charges on you.

Defraud innocent people of billions, that's ok, but downgrade the US, we will hunt you down.

The US is an utter embarassment.

Thu, 04/26/2012 - 17:27 | 2378172 FlyoverCountryS...
FlyoverCountrySchmuck's picture

"but downgrade the US, we will hunt you down."

 

And, exactly what did YOU THINK was going to happen when you elected Obama and the most radical Socialists in American History to run the country?

Puppies and Unicorns?

Thu, 04/26/2012 - 18:30 | 2378420 Teamtc321
Teamtc321's picture

+1000 Perfect post. 

Thu, 04/26/2012 - 17:23 | 2378160 onarga74
onarga74's picture

They have a rule that they can't go from aaa to toxic in one move.  Kinda like a bug on the windshield of the Titanic

Thu, 04/26/2012 - 17:29 | 2378177 buzzsaw99
buzzsaw99's picture

Chickenshits. They waited to see if EJ would get into trouble first. The "good" ratings agencies must call blankfein before they downgrade anything or face subpoena and possible indictment by squid operatives at the fbi and sec.

Thu, 04/26/2012 - 17:31 | 2378187 konputa
konputa's picture

Scalp 'em, bitchez.

Thu, 04/26/2012 - 17:31 | 2378189 q99x2
q99x2's picture

'Kingdom of Spain BBB-'

Kingdom of Me AAA+.

Hey does that mean the banksters aren't allowed to give the police and politicians pensions to themselves via Spain?

Thu, 04/26/2012 - 17:32 | 2378190 buzzsaw99
buzzsaw99's picture

FREE SERGEY!

Thu, 04/26/2012 - 17:32 | 2378196 Piranhanoia
Piranhanoia's picture

"Franco II,  El Revolver".  When do the invasions start and when is Britain going to get "The Blitz II"?

Thu, 04/26/2012 - 17:44 | 2378238 vote_libertaria...
vote_libertarian_party's picture

SPY, QQQ, IWM drop about .4% right after this news came out AHs.

 

Interesting....

Thu, 04/26/2012 - 17:56 | 2378280 FinalCollapse
FinalCollapse's picture

There will be some pain in Spain. Let's see the next 10 year bond auction action.

Thu, 04/26/2012 - 17:56 | 2378281 lizzy36
lizzy36's picture

Apparently commas matter. :)

One wonders when France gets downgraded.....right around the time LTRO4,5,6 and QE4 are announced?

Thu, 04/26/2012 - 18:20 | 2378381 sockratte
sockratte's picture

afterwards. to get ltro7

Thu, 04/26/2012 - 18:00 | 2378296 misterc
misterc's picture

What's the ESM bond rating going to be with Spain at BBB+ ?

Thu, 04/26/2012 - 18:07 | 2378318 Everybodys All ...
Everybodys All American's picture

The spin will be ... "well we all saw this coming. This should not come as a surprise. This is already built into pricing. Well thats all from down here ... back to you Maria."

Thu, 04/26/2012 - 18:53 | 2378487 valley chick
valley chick's picture

exactly the response that was spewed on tv.

Thu, 04/26/2012 - 18:09 | 2378327 lizzy36
lizzy36's picture

As a reminder - Spain is on the hook for 12% of EFSF and 12% of ESM.Fourth largest contributor/guarantor.

Looks like Kyle Bass is about to find out how a country can be both contributor and recipient of bailout funds all at once.

http://www.zerohedge.com/news/revised-efsf-draft-shows-italy-spain-responsible-one-third-european-bailout-funding

Thu, 04/26/2012 - 18:15 | 2378361 Christoph830
Christoph830's picture

No worries.  "Enable iterative calculation" checkbox is checked.  We can handle it.

Thu, 04/26/2012 - 18:35 | 2378433 Rubbish
Rubbish's picture

It's all about the Force of money my Jedi Warrior.

Thu, 04/26/2012 - 18:56 | 2378499 valley chick
valley chick's picture

alrighty then....any other country out there that can come up with Spain's 12% of EFSF and 12% of ESM? 

Thu, 04/26/2012 - 19:15 | 2378547 CrashisOptimistic
CrashisOptimistic's picture

Sorry liz, this is lesson of 2011 territory.

Analysis and math can be trumped by government edict.  And it will be.

The game is over when the rules change, and they have.  This is just a different game now and we are trying to keep score the old way.

It's all bullshit.

Thu, 04/26/2012 - 18:09 | 2378331 bnbdnb
bnbdnb's picture

Time for Japan to ease and print, buying sovereign Spanish bonds.

Thu, 04/26/2012 - 18:13 | 2378351 Undecided
Thu, 04/26/2012 - 18:36 | 2378438 crawl
crawl's picture

Downgrades are only bullish in this day and time. Just a few years ago, such a downgrade was catastrophic. Not anymore with central banks around the world willing and eager to flood it with cheap money.

And with the CBs likely to get involved very openly tomorrow or over night, markets closing at new highs tomorrow is the only illogical outcome I can see. Welcome to insanity.

Thu, 04/26/2012 - 18:46 | 2378470 anyways
anyways's picture

well, the market is tired of that 'european crisis' crap. As all as we know, TPTB will pump money in the ponzi anyway.

Thu, 04/26/2012 - 19:41 | 2378620 xela2200
xela2200's picture

But everything in the US is peachy because we live in a vacuum.

Thu, 04/26/2012 - 21:11 | 2378863 ebworthen
ebworthen's picture

Bet the SEC lawyers and S&P raters have lunch, drinks, & a laugh over this one.

Thu, 04/26/2012 - 22:18 | 2378944 earleflorida
earleflorida's picture

they [you know - the good-housekeeping 'sec' approved rating raider's?] gotta get a running diversion before they downgrade merry-ole-england --- wait for it, mr. egan?

i can hear the squealing mercurial limey's down on 'canary wharf', scratching their voice - whilst, 'carrying coals to new castle' on a tireless-hump,... and boe's king hiding under, "nigel' s dunce cap"?

cheers

Thu, 04/26/2012 - 22:20 | 2379013 NOPOMO
NOPOMO's picture

Can you say "BULLISH"....buy the dip cause Benny will backstop the markets

 

Thu, 04/26/2012 - 22:46 | 2379057 Ted Baker
Ted Baker's picture

WHERE IS THE MOST ANTICIPATED DOWNGRADE OF THE UNITED KINGDOM?????

Fri, 04/27/2012 - 00:05 | 2379222 NorthPole
NorthPole's picture

How come EURUSD is so stable , seems nailed to 1.31 +- 0.02 despite a wild merry-go-round of news. Bullshitsh!

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