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Last week, beleaguered Illinois Comptroller Leslie Geissler Munger admitted that, thanks to the bitter budget battle going on in Springfield, the state would miss a $560 million pension payment in November. Now, in a move that shouldn’t exactly surprise anyone, Fitch has cut the state’s GO rating citing the budget impasse. The move affects some $27 billion in debt.
Brazil’s economic recession is likely to be deeper and longer than Fitch’s earlier expectations and its performance has diverged materially from those of its rating peers. Medium-term prospects also look weak compared to peers and most other large emerging markets. Fitch forecasts that Brazil’s economy will contract by 3% and 1%, respectively in 2015 and 2016 before recording modest growth in 2017, with risks skewed largely to the downside.
– Fitch has downgrades Russia’s rating from BBB to BBB-, negative outlook (Itar Tass, Jan 10, 2015):
LONDON, January 10. /TASS/. The international rating agency Fitch said on Friday it had downgraded Russia’s long-term rating from BBB to BBB-, negative outlook.
“Fitch Ratings has downgraded Russia’s Long-term foreign and local currency Issuer Default Ratings (IDR) to ‘BBB-‘ from ‘BBB’. The issue ratings on Russia’s senior unsecured foreign and local currency bonds have also been downgraded to ‘BBB-‘ from ‘BBB’. The Outlooks on the Long-term IDRs are Negative. The Country Ceiling has been lowered to ‘BBB-‘from ‘BBB’. The Short-term foreign currency IDR has been affirmed at ‘F3’,” Fitch said in a statement.
– Fitch Downgrades France To AA: Full Text (ZeroHedge, Dec 12, 2014):
And the final punch in the gut on this bloodbathy Friday some from French Fitch which just downgraded France from AA+ to AA.
Fitch Downgrades France to ‘AA’; Outlook Stable
Fitch Ratings has downgraded France’s Long-term foreign and local currency Issuer Default Ratings (IDR) to ‘AA’ from ‘AA+’. This resolves the Rating Watch Negative (RWN) placed on France’s ratings on 14 October 2014. The Outlooks on France’s Long-term ratings are now Stable. The issue ratings on France’s unsecured foreign and local currency bonds have also been downgraded to ‘AA’ from ‘AA+’ and removed from RWN. At the same time, Fitch has affirmed the Short-term foreign currency IDR at ‘F1+’ and the Country Ceiling at ‘AAA’.
– Municipal Bankruptcy? Why Not! And so The Floodgates Open (Testosterone Pit, Nov 16, 2013):
Today and Monday, individual investors have a unique opportunity to “benefit” from the greatest bond bubble in history, even before institutional investors get to jump in, and buy sewer bonds – yup, that’s where they belong – issued by a county that landed in bankruptcy court because it defaulted on its prior sewer bonds. The money will go to the existing bondholders who’ll get a fashionable haircut as part of the deal – a deal made in bond-bubble heaven.
Jefferson County, which includes Alabama’s largest city, Birmingham, filed for Chapter 9 bankruptcy protection in 2011 when it defaulted on $3.1 billion in sewer bonds. At the time, it was the largest municipal bankruptcy. That record was crushed when Detroit filed in July.
– Fitch puts US debt rating on watch for downgrade (AFP, Oct 15, 2013):
Rating agency Fitch on Tuesday put the United States on warning for a downgrade after Congress failed to reach a deal on raising the country’s debt ceiling.Fitch placed the United States’s top-grade AAA rating on a “negative watch”, citing the possibility the Treasury could default on its obligations after October 17 if the ceiling is not raised.
– Haunted By The Last Housing Bubble, Fitch Warns “Gains Are Outpacing Fundamentals” (ZeroHedge, May 28, 2013):
The last week has seen quite dramatic drops in the prices of a little-discussed but oh-so-critical asset-class in the last housing bubble’s ‘pop’. Having just crossed above ‘Lehman’ levels, ABX (residential) and CMBX (commercial) credit indices have seen their biggest weekly drop in 20 months as both rates and credit concerns appear to be on the rise. Perhaps it is this price action that has spooked Fitch’s structured products team, or simply the un-sustainability (as we discussed here, here and here most recently) that has the ratings agency on the defensive, noting that, “the recent home price gains recorded in several residential markets are outpacing improvements in fundamentals and could stall or possibly reverse.” Simply put, “demand is artificially high… and supply is artificially low.”
– Fitch Downgrades United Kingdom to ‘AA+’; Outlook Stable (Reuters, April 19, 2013)
– Fitch Strips UK Of AAA Credit Rating, Downgraded To AA+ (Huffington Post, April 19, 2013)
– Fitch cuts UK credit rating on ‘weaker economic and fiscal outlook’ (Telegraph, April 19, 2013):
Fitch joined Moody’s in downgrading the UK to AA+ “to reflect a weaker economic and fiscal outlook” that has caused both the budget deficit and national debt to soar above earlier forecasts.
It means that only Standard & Poor’s has the UK on the top rating, albeit on “negative outlook”.
– Fitch Issues Another Rating Warning For AmericAAA (ZeroHedge, Jan 15, 2013):
With precisely one month left until the early bound of the debt ceiling crunch and a possible US government shut down and/or technical default, and with M.A.D. warnings from the president and treasury secretary doing nothing to precipitate a sense of urgency (which will not arrive until there is a 20% market drop, so far consistently delayed but which will eventually happen), here comes the most toothless of rating agencies, French Fitch which somehow kept its mouth shut over the past 18 months, when US debt rose by over $2.1 trillion and debt to GDP hit 103%, shaking a little stick furiously, no doubt under guidance by its corporate HoldCo owners: French Fimilac SA.
There is a material risk the United States would lose its triple-A if there is a repeat of 2011 wrangling over raising the country’s self-imposed debt ceiling, rating firm Fitch said on Tuesday.
Flashback (This is also coming to the US & Europe):
– Argentina’s Economic Collapse (Documentary)
– Fitch downgrades Argentina and predicts default (Telegraph, Nov 27, 2012):
Credit rating agency Fitch has downgraded Argentina, which is locked in a court battle in New York over its debt, and said the country would probably default.
Fitch cut its long-term rating for Argentina to “CC” from “B,” a downgrade of five notches, and cut its short-term rating to “C” from “B”. A rating of “C” is one step above default, AP reported.
US judge Thomas Griesa of Manhattan federal court last week ordered Argentina to set aside $1.3bn for certain investors in its bonds by December 15, even as Argentina pursues appeals.
– Fitch Warns UK Likelihood It Loses AAA Rating Has Increased (ZeroHedge, Sep 28, 2012):
One-by-one, the highest quality collateral in the world (according to ratings that is) is disappearing. To wit, Fitch warns that a downgrade of the UK’s AAA rating is increasingly likely: “weaker than expected growth and fiscal outturns in 2012 have increased pressure on the UK’s ‘AAA’ rating, which has been on Negative Outlook since March 2012.” The Negative Outlook on the UK rating reflects the very limited fiscal space, at the ‘AAA’ level, to absorb further adverse economic shocks in light of the UK’s elevated debt levels and uncertain growth outlook. Global economic headwinds, including those emanating from the on-going eurozone crisis, have compounded the drag on UK growth from private sector deleveraging and fiscal consolidation as well as from depressed business and consumer confidence, weak investment, and constrained credit growth. But no mention of unlimited QE?
– Spanish bond yields at record high as Fitch downgrades 18 banks and financial contagion spreads to Italy (Independent, June 12, 2012):
Spain’s borrowing costs soared to their highest levels since the introduction of the single currency in 1999 today, as any confidence investors might have taken from Madrid’s weekend pledge to seek a bailout for its toxic banking sector drained away.
Yields on the country’s 10 year bonds shot up to 6.8 per cent this afternoon as investors frantically dumped their holdings of Spanish debt, before falling back to 6.72 per cent.
The credit rating agency Fitch added fuel to the flames of alarm by downgrading 18 Spanish banks, following its downgrade of Madrid’s sovereign debt to BBB last month. Among the Spanish lenders cut were Bankia, CaixaBank, and Banco Popular Espanol, with Fitch blaming the weakening Spanish economy, which is forecast to contract by 1.7 per cent this year and to remain in recession well into next year.
– The Mortgage Crisis Hits France Front And Center: Are French Bank Nationalizations Imminent? (ZeroHedge, May 20, 2012)
– Fitch Cuts Greece as Leaders Spar Over Euro Membership (Bloomberg, May 17, 2012):
Greece’s credit rating was downgraded one level by Fitch Ratings on concerns the country won’t be able to muster the political support needed to sustain its membership in the euro area as leaders began campaigning ahead of the second national vote in six weeks.
– Fitch downgrades JPMorgan Chase (CNN Money, May 11, 2012):
NEW YORK (CNNMoney) — The closing bell brought no relief for JPMorgan Chase on Friday, as a major credit rating agency moved to downgrade its debt almost exactly 24 hours after the bank revealed a $2 billion trading loss.
Fitch Ratings downgraded both JPMorgan’s short-term and long-term debt, with the latter falling to A+ from AA-. The bank, the country’s largest by assets, was also placed on ratings watch negative.
Fitch said it views the $2 billion loss as “manageable” but added that “the magnitude of the loss and ongoing nature of these positions implies a lack of liquidity.”
– Fitch Downgrades JPM To A+, Watch Negative (ZeroHedge, May 11, 2012):
Update: now S&P is also one month behind Egan Jones: JPMorgan Chase & Co. Outlook to Negative From Stable by S&P. Only NRSRO in pristinely good standing is Moodys, and then the $2.1 billion margin call will be complete.
So it begins, even as it explains why the Dimon announcement was on Thursday – why to give the rating agencies the benefit of the Friday 5 o’clock bomb of course:
- JPMorgan Cut by Fitch to A+/F1; L-T IDR on Watch Negative
What was the one notch collateral call again? And when is the Morgan Stanley 3 notch cut coming? Ah yes:
So… another $2.1 billion just got Corzined? Little by little, these are adding up.
Oh and guess who it was that downgraded JPM exactly a month ago. Who else but SEC public enemy number one: Egan-Jones:
Synopsis: Reliance on prop trading and inv bkg income remain. LLR declines (down $1.7B QoQ and $3.87B YoY) offset DVA losses in the investment bank. Wholesale loans were up 23% YoY and 2% QoQ. Middle Mkt, Cmml Term, Corp Client and Cmml Real Estate lending increased by 9%, 2%, 16% and 19% YoY. Middle Mkt and Corp lending was up 2% and 3% QoQ respectively, while Cmml Term, and Cmml Real Estate lending were down 2%, and 9% respectively. Card and consumer loans were down 2% and 5% YoY respectively (down 5% and 1% QoQ respectively). Non accruals are up 14% QoQ due to weakness in JPM’s student loan portfolio. Reserve coverage is good and capital is adequate. We believe JPM will experience further weakness in its retail portfolio due to a softening economy. We are downgrading.
Full Fitch “analysis”:
– The Truth About Egan-Jones (ZeroHedge, April 27, 2012):
… but not from us: after all we are known for being biased, which in the mainstream media parlance means calling it like it is. No – instead we leave it to none other than Bloomberg’s Jonathan Weil who does as good a job of being “biased” as we ever could: “Egan-Jones, which has been in business since 1992, could have continued operating as an independent publisher of ratings and analysis, not subject to government oversight or control. Instead it chose to play within the Big Three’s system, exposing itself to regulation and the whims of the SEC in exchange for the government’s imprimatur. Now it’s paying the price.” And not only that: as the most recent example of Spain just shows, where Egan Jones downgraded Spain 9 days ago and was ignored, but well ahead of everyone else, only to be piggybacked by S&P, and the whole world flipping out, it has become clear: calling out reality, and the fools that populate it, is becoming not only a dangerous game, but increasingly more illegal. Then again – this is not the first time we have seen just this happen in broad daylight, with nobody daring to say anything about it. In fact, this phenomenon tends to be a rather traditional side-effect of every declining superpower. Such as the case is right now…
From BBG’s Jon Weil:
The first time I wrote about Sean Egan and his small, independent credit-research firm, Egan-Jones Ratings Co., was in December 2007 for a column about the bond insurer MBIA Inc. (MBI) And man, did he nail it.
The three big credit raters — Moody’s Investors Service, Standard & Poor’s, and Fitch Ratings — all had AAA ratings on MBIA’s insurance unit, their highest grade. Egan said it deserved much lower. Anyone reading MBIA’s financial reports could see the company was losing money and needed billions of dollars of fresh capital.
By mid-2008, the Big Three had cut their ratings. Once again, Egan, a lonely voice of reason who saw the financial crisis coming, had shown his larger competitors to be incompetent or compromised. It was one of many great calls to come for Egan-Jones. As for MBIA, which had no revenue last quarter, it’s still struggling.
So if you had told me back then that the Securities and Exchange Commission’s enforcement division more than four years later would be accusing Egan, and his firm, of securities-law violations — but not any of the big rating companies — there’s no way I would have believed you. That’s what happened this week, though.
Next train ‘Ausschwitz’:
The videos down below are a MUST-SEE!
– America: A Government Out Of Control (ZeroHedge, April 8, 2012):
“A government big enough to give you everything you want, is strong enough to take everything you have”
– Thomas Jefferson
Something odd and not quite as planned happened as America grew from its “City on a Hill” origins, on its way to becoming the world’s superpower: government grew. A lot. In fact, the government, which by definition does not create any wealth but merely reallocates it based on the whims of a select few, has transformed from a virtually invisible bystander in the economy, to the largest single employer, and a spending behemoth whose annual cash needs alone are nearly $4 trillion a year, and where tax revenues no longer cover even half the outflows. One can debate why this happened until one is blue in the face: the allures of encroaching central planning, the law of large numbers, and the corollary of corruption, inefficiency and greed, cheap credit, the transition to a welfare nanny state as America’s population grew older, sicker and lazier, you name it. The reality is that the reasons for government’s growth do not matter as much as realizing where we are, and deciding what has to be done: will America’s central planners be afforded ever more power to decide the fates of not only America’s population, but that of the world, or will the people reclaim the ideals that the founders of this once great country had when they set off on an experiment, which is now failing with every passing year?
As the following video created by New America Now, using content by Brandon Smith whose work has been featured extensively on the pages of Zero Hedge, notes, “we tend to view government as an inevitability of life, but the fact is government is not a force of nature. It is an imperfect creation of man and it can be dismantled by man just as easily as it can be established.” Unfortunately, the realization that absolute power corrupts absolutely, and absolute central planning leads to epic catastrophes without fail, seems a long way away: most seem content with their lot in life, with lies that their welfare money is safe, even as the future is plundered with greater fury and aggression every passing year, until one day the ability to transfer wealth (benefiting primarily the uber rich, to the detriment of the middle class which is pillaged on an hourly basis), from the future to the present is gone, manifesting in either a failed bond auction or hyperinflation. The timing or shape of the transition itself is irrelevant, what is certain is that America is now on collision course with certain collapse unless something changes. And one of the things that has to change for hope in the great American dream to be restored, is the role, composition and motivations of government, all of which have mutated to far beyond what anyone envisioned back in 1776. Because America is now saddled with a Government Out Of Control.
Watch the two clips below to understand just how and why we have gotten to where we are. Also watch it to, as rhetorically asked by the narrator, prompt us to question whether the government we now have is still useful to us and what kind of powers it should be allowed to wield.
– S&P slaps ten Spanish banks with downgrade (Sydney Morning Herald, Dec. 16, 2011):
Standard and Poor’s downgraded Thursday the credit rating of 10 Spanish banks after applying new criteria, and warned it may lower their short-term scores further.
The 10 banks had their ratings lowered and remained in “creditwatch with negative implications”, indicating the risk of a further downgrade, Standard and Poor’s said in a statement.
– S&P cuts ratings of 10 Spanish banks (Reuters, Dec. 15, 2011):
Standard & Poor’s cut the credit ratings of 10 Spanish banks on Thursday and said they remained on watch for a possible further cut subject to a review of Spain’s sovereign rating.
– Fitch cuts ratings on 8 major banks (AP, Dec. 15, 2011):
NEW YORK (AP) — Fitch Ratings on Thursday downgraded its viability ratings on eight of the world’s biggest banks, citing increased challenges facing the banking sector due to weak economic growth and heightened regulation.
The firm lowered its viability ratings for Bank of America Corp., Barclays PLC, BNP Paribas, Credit Suisse AG, Deutsche Bank AG, The Goldman Sachs Group Inc., Morgan Stanley and Societe Generale.
YouTube Added: 29.11.2011
YouTube Added: 29.11.2011
On the Tuesday, November 29 edition of the Alex Jones Show, Alex talks about moves by the globalists to attack Syria as France trains “rebels” in Turkey and the Russians deny they have dispatched war ships to guard their interests in the Middle Eastern country. Historian and author Webster Tarpley talks with Alex about Syria, Iran and Pakistan.
– Hungary May Be Pushed to Junk Grade This Month on S&P Move (Bloomberg, Nov. 12, 2011):
Hungary’s sovereign credit grade may be cut to junk this month after Standard & Poor’s Ratings Services placed the country’s lowest investment grade on “CreditWatch with negative implications.”
S&P is likely to make a decision this month on Hungary’s credit grade, currently at BBB-, the rating company said in a statement today. Fitch Ratings yesterday cut the outlook on Hungary’s lowest investment grade to negative from stable, joining S&P and Moody’s Investors Service.
– Fitch cuts rating outlook on Hungary to negative – Country one step closer to junk grade (Portfolio.HU, Nov. 12, 2011):
Hungary is now the closest possible to junk grade at Fitch Ratings as the credit rating agency has revised the Outlooks on the country’s Long-term foreign and local currency Issuer Default Ratings (IDR) to Negative from Stable and affirmed the ratings at ‘BBB-‘ and ‘BBB’, respectively. Hungary is now a single step away from non-investment status with a negative outlook at all three major rating agencies (Fitch, S&P and Moody’s).
– New Zealand hit with double ratings downgrade (AFP, Sep. 30, 2011):
WELLINGTON — Standard & Poor’s and Fitch Ratings both downgraded New Zealand’s sovereign rating, in a move the government said was “ugly” but reflected wider turmoil in world debt markets.
Analysts on Friday said the downgrade made New Zealand only the second Asia Pacific country after Japan to have its rating cut amid the sovereign debt crisis centred on Europe.
Fitch cut New Zealand’s long-term foreign currency rating one notch to “AA” from “AA+” and the long-term local currency rating to “AA+” from “AAA”, with S&P following suit several hours later.
Both Fitch and S&P blamed New Zealand’s soaring external debt, which hit 70 percent of annual gross domestic product (GDP) in June, for the rating cut, with S&P also citing the huge cost of rebuilding earthquake-hit Christchurch.
– The Bond Vigilantes Are Here: US Net Notional CDS Outstanding Surpasses Greece For The First Time (ZeroHedge, July 20, 2011):
While the CDS market for various insolvent European names whose credit default swaps are trading 10 or more points upfront has become more or less nothing but noise, and the only true way to hedge risk exposure, courtesy of ISDA’s advance warning that no matter what a CDS will never be triggered, is to sell cash bonds, the market for default risk is quite active for those names which still trade in a reasonable range: such as between 50 bps and 200 bps. And while the Bloomberg chart below demonstrates on an absolute basis the US is due for a two notch downgrade by S&P based on the recently observed spike in US default risk, it is DTCC data that is more troubling.
As the first chart below shows, of the Top 25 CDS outstanding net notional names tracked by DTCC, there is one name that is a big outlier on both a month over month and year over year basis: the United States of America. The first thing to note is that in the past week, US net notional CDS outstanding just hit $4.8 billion, an increase from $4.5 billion in the past month, a 5.4% increase (the biggest over all top 25 names), pushing the net risk on the US above that of Greece for the first time (Greece declined from $5 billion to $4.6 billion). More disturbing is that on a percentage basis, the year over year change in US net CDS outstanding is the biggest of all, more than doubling at 108.6%, followed only by China and Japan, at 96.7% and 80.9% respectively. Yes: the CDS itself has not blown out yet, but the stealthy increase in the net notional in the troika of “most stable countries” means that the smart money is already quietly positioning itself for the biggest and most significant blow out ever. It also means that the spreads of such countries of Greece and Portugal (a major drop in net notional M/M and Y/Y) not to mention Italy, are yesterday’s news. As most revel in the latest nonsensical Group of 6 plan, the bond vigilantes are already quietly setting the trap.
Below is the biggest percentage change in net CDS notional on a monthly and annual basis:
And here is Bloomberg’s take on where the US rating should be based on its CDS spread:
A Bloomberg Brief CDS implied credit rating model, which compares composite credit ratings against the cost of CDS, shows that investors may be expecting a downgrade to as low as ‘AA’ for the U.S. The world’s largest economy has already been placed on credit watch by both Moody’s and S&P. The cost of protecting against a U.S. default rose to 54.4 basis points yesterday from less than 40 in April.
The composite credit rating — on the y-axis — is calculated by quantifying the three primary ratings agencies’ (S&P, Moody’s, and Fitch) ratings, where available, and averaging the results. A score of one indicates the highest rating ‘AAA’; a score of 10 or better indicates that a country is investment-grade. The cost of fiveyear CDS — on the x-axis — is the amount traders are willing to pay to protect against a debt default.
The current implied credit rating for the U.S. is 2.7, compared to 2.2 back in March, equivalent to approximate ly ‘AA’ on S&P’s scale. That is two levels below the U.S.’s current rating. March was the last time Bloomberg Brief looked at these implied credit ratings. At that time, the three most likely candidates to be downgraded were Portugal, Belgium and Spain.
Both Portugal and Spain have been downgraded. Spain is also the most likely candidate for a downgrade at present, with a composite rating of 2.7 versus a CDS implied rating of 9.1, equivalent to ‘BBB’ on S&P’s rating scale.
– Greece finance chief downplays default rating (AP, July 14, 2011):
ATHENS, Greece (AP) — Greece’s finance minister sought to downplay fears of the implications of a default rating being slapped on the debt-ridden country after an expected second bailout.
Evangelos Venizelos told Parliament Thursday that the country faced “no danger of bankruptcy” and that its banking system was secure.
On Wednesday, Fitch slashed its rating on Greece by another three notches and further into junk status. The move from B+ to CCC leaves Greece just one grade above a default rating.
– Russia Seeks to Loosen Rating Companies’ Grip (Bloomberg, July 13, 2011):
Russia and members of the Eurasian Economic Community, a grouping of former Soviet republics, are seeking to loosen the dominance of U.S. credit-rating companies and may set up an independent rival next year.
Prime Minister Vladimir Putin has said he’s an “ardent supporter” of the plan because Russia’s debt grade is an “outrage” that lifts corporate borrowing costs and increases risks. The nation’s sovereign credit rating was last raised by New York-based Moody’s Investors Service in 2008 to Baa1, the third-lowest investment grade, one step above Brazil and four below China.
“It’s madness to trust American rating agencies,” Sergei Glazyev, the group’s deputy general secretary, said in an interview in Moscow yesterday. “The market is objectively interested in new reference points.”
Russia is championing a new ratings company after Poland said last week it may use its six-month term holding the rotating presidency of the European Union to campaign for an independent European credit evaluator. Dagong Global Credit Rating Co., the first domestic rating company set up in China, began issuing sovereign ratings a year ago.
Russia is rated A by Dagong, one level below the U.S. Moody’s ranks Russia seven steps lower and Standard & Poor’s and Fitch Ratings eight levels below the United States’ AAA grade, their highest.