Spain downgraded to BBB-
As we have said it before, Espana, everything under the sun. S&P just downgraded Spain to BBB-.
- The deepening economic recession is limiting the Spanish government’s policy options.
- Rising unemployment and spending constraints are likely to intensify social discontent and contribute to friction between Spain’s central and regional governments.
- Doubts over some eurozone governments’ commitment to mutualizing the costs of Spain’s bank recapitalization are, in our view, a destabilizing factor for the country’s credit outlook.
- We are therefore lowering our long- and short-term sovereign credit ratings on Spain to ‘BBB-/A-3′ from ‘BBB+/A-2′.
- 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 lack of a clear direction in eurozone policy.
Full report here.
Spain joins the “B” Club
Although not overly unexpected, S&P delivered another downgrade of Spain. Leaving the fine A club and joining the B club, this only shows how badly run the world’s 12th largest economy actually is. The Trader still believes majority of the analyst community still underestimate the bad loans, the state of bank’s balance sheets and the mentality of dealing with economic reality in Spain, from politicians, companies, down to the average person. The boom has ended, and the hang over is just starting. Despite all this, the top news in today’s version of El Pais, is regarding king Juan Carlos and the status of his hip after the big game safari in Botswana.
Tic tac tic tac as PIIGS yields spike further.
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