S&P recently acted to markedly downgrade Spain, and Moody’s has ended its recent ratings review, leaving Spain at Baa3; and while ratings could remain largely stable in the short-term (supported by OMT's promise and the possible delay of GRExit), there are a few exceptions such as France and and the UK that Citi's Rates group expect to see downgrades on in the short-term. The following table provides the full breakdown of Moody's and S&P's ratings for the advanced economies along with Citi's model views - which imply weak outlooks for most of Europe in the medium-term as Greek reality hits home.
and in cased you were wondering just what Spain is doing with its bank bailout plan:
Although we expect most sovereigns will have stable ratings in the near-term, there are a few notable exceptions. We expect that Moody’s will place France on a ratings review for a possible downgrade (ie Negative Watch) in the next 2-3 quarters, largely because of the fiscal program and weak economy. Moreover, we also expect that S&P will likely place the UK on Negative Outlook in the next 2-3 quarters (in line with Moody’s Aaa Negative Outlook). We also expect that Portugal will be downgraded over the next 2-3 quarters due to continued recession plus the probable need to extend its Troika programme.
Over the long-term, we still believe that ultimately, it will become evident that the Greek programme remains off track and that Greece’s debt is still unsustainable. We think the likely stalemate between Greece and its international creditors will eventually lead to a withdrawal of international support leaving Grexit as potentially the only available solution for Greece.
Due to our longer-term view on Grexti and various sovereign-specific factors, we continue to expect a wide series of downgrades over the next 2-3 years