Moody’s Warns On USAAA Rating

Moody’s Warns On USAAA Rating; IMF Piles On (ZeroHedge, Jan 2, 2012):

Moody’s has stepped forward with the first warning shot across the bow that:

  • *MOODY’S: MORE MEDIUM TERM ACTIONS MAY BE NEEDED TO SUPPORT Aaa

Has contradicted itself (from September) on the debt-ceiling breach; and warns that while the deal ‘mitigates’ some fiscal drag, it does not remove it. To wit: the IMF piles on:

  • *IMF SAYS `MORE REMAINS TO BE DONE’ ON U.S. PUBLIC FINANCES
  • *IMF SAYS U.S. DEBT CEILING SHOULD BE RAISED `EXPEDITIOUSLY’

Full statements below.

Read moreMoody’s Warns On USAAA Rating

Italian PM Mario Monti Quits As Silvio Berlusconi Withdraws Support

Italian PM Monti quits as Berlusconi withdraws support (Irish Examiner, Dec 9, 2012):

Prime minister Mario Monti has told Italy’s president he is resigning because he can no longer govern after Silvio Berlusconi’s party withdrew crucial support.

The move paves the way for early elections a year after the unelected economist helped pull the country back from the brink of financial disaster.

Only hours earlier, 76-year-old billionaire media baron Mr Berlusconi had announced he would run for a fourth term as premier, aiming for a dramatic comeback after he quit in disgrace last November.

Read moreItalian PM Mario Monti Quits As Silvio Berlusconi Withdraws Support

Moody’s Downgrades France’s Credit Rating From AAA To Aa1 (Full Text)

One Less In The AAA Club: Moody’s Downgrades FrAAnce From AAA To Aa1 – Full Text (ZeroHedge, Nov 19, 2012):

After hours shots fired, with Moody’s hitting the long overdue one notch gong on France:

  • MOODY’S DOWNGRADES FRANCE’S GOVT BOND RATING TO Aa1 FROM Aaa
  • FRANCE MAINTAINS NEGATIVE OUTLOOK BY MOODY’S

Euro tumbling. In other news, UK: AAA/Aaa; France: AA+/Aa1… Let the flame wars begin

From the release:

Moody’s decision to downgrade France’s rating and maintain the negative outlook reflects the following key interrelated factors:

Read moreMoody’s Downgrades France’s Credit Rating From AAA To Aa1 (Full Text)

S&P Cuts Spain Credit Rating To Near Junk

S&P cuts Spain credit rating to near junk (Reuters, Oct 11, 2012):

Standard & Poor’s on Wednesday cut Spain’s sovereign credit rating to BBB-minus, just above junk territory, citing a deepening economic recession that is limiting the government’s policy options to arrest the slide.

The S&P downgrade comes with a negative outlook reflecting the credit ratings agency’s view that there are significant risks to economic growth and budgetary performance, plus a lack of clear direction in euro zone policies.

“In our view, the capacity of Spain’s political institutions (both domestic and multilateral) to deal with the severe challenges posed by the current economic and financial crisis is declining,” S&P said in a statement.

S&P’s two-notch downgrade from BBB-plus brings it in line with Moody’s Investors Service’s Baa3 rating. Moody’s has Spain on review for a possible downgrade.

Read moreS&P Cuts Spain Credit Rating To Near Junk

Fitch Warns UK Likelihood It Loses AAA Rating Has Increased

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?

Read moreFitch Warns UK Likelihood It Loses AAA Rating Has Increased

Egan-Jones Downgrades US Credit Rating From AA To AA-

Egan Jones Downgrades US From AA To AA- (ZeroHedge, Sep 14, 2012):

From Egan Jones, who downgraded the US for the first time ever last July, two weeks ahead of S&P:

Synopsis: UNITED STATES (GOVT OF) EJR Sen Rating(Curr/Prj) AA-/ N/A Rating Analysis – 9/14/12 EJR CP Rating: A1+ Debt: $15.2B EJR’s 1 yr. Default Probability: 1.2%

Up, up, and away – the FED’s QE3 will stoke the stock market and commodity prices, but in our opinion will hurt the US economy and, by extension, credit quality. Issuing additional currency and depressing interest rates via the purchasing of MBS does little to raise the real GDP of the US, but does reduce the value of the dollar (because of the increase in money supply), and in turn increase the cost of commodities (see the recent rise in the prices of energy, gold, and other commodities). The increased cost of commodities will pressure profitability of businesses, and increase the costs of consumers thereby reducing consumer purchasing power. Hence, in our opinion QE3 will be detrimental to credit quality for the US.

Read moreEgan-Jones Downgrades US Credit Rating From AA To AA-

Moody’s Warns Of 1 Notch Downgrade If A Bitterly Divided Congress Does Not Begin To Cooperate

Moody’s Warns Of 1 Notch Downgrade If A Bitterly Divided Congress Does Not Begin To Cooperate (ZeroHedge, Sep 11, 2012):

13 months ago, in the aftermath of the debt ceiling fiasco, which we now know was a last minute compromise achieved almost entirely thanks to the market plunging to 2011 lows, S&P had the guts to downgrade the US. Moody’s did not. Now, it is Moody’s turn to fire up the threat cannon with a release in which it says that should the inevitable come to pass, i.e. should congressional negotiations not “lead to specific policies that produce a stabilization and then downward trend in the ratio of federal debt to GDP over the medium term” then “Moody’s would expect to lower the rating, probably to Aa1” or a one notch cut. Moody’s also warns that should a repeat of last year’s debt ceiling fiasco occur, it will also most likely cut the US. Of course, that the US/GDP has risen by about 8% since the last August fiasco has now been apparently forgotten by both S&P and Moodys. Sadly, continued deterioration in the US credit profile is inevitable, as every single aspect of modern day lives that is “better than its was 4 years ago” has been borrowed from the future. More importantly, with the S&P at multi year highs courtesy of Bernanke using monetary policy to replace the need for fiscal policy, Congress will see no need to act, and Moody’s warning will be completely ignored. This will continue until it no longer can.From Moody’s:

Budget negotiations during the 2013 Congressional legislative session will likely determine the direction of the US government’s Aaa rating and negative outlook, says Moody’s Investors Service in the report “Update of the Outlook for the US Government Debt Rating.”

If those negotiations lead to specific policies that produce a stabilization and then downward trend in the ratio of federal debt to GDP over the medium term, the rating will likely be affirmed and the outlook returned to stable, says Moody’s.

If those negotiations fail to produce such policies, however, Moody’s would expect to lower the rating, probably to Aa1.

Read moreMoody’s Warns Of 1 Notch Downgrade If A Bitterly Divided Congress Does Not Begin To Cooperate

Moody’s Says U.S. Faces Aaa Cut Without Budget Deal in 2013

Moody’s Says U.S. Faces Aaa Cut Without Budget Deal in 2013 (Bloomberg, Sep 11, 2012):

Moody’s Investors Service said it may join Standard & Poor’s in downgrading the U.S.’s credit rating unless Congress next year reduces the percentage of debt- to-gross-domestic-product during budget negotiations.

The U.S. economy will probably tip into recession next year if lawmakers and President Barack Obama can’t break an impasse over the federal budget and if George W. Bush-era tax cuts expire in what’s become known as the “fiscal cliff,” according to a report by the nonpartisan Congressional Budget Office published on Aug. 22. The rating would likely be cut to Aa1 from Aaa if an agreement on the debt ratio isn’t reached, Moody’s said in a statement today.

Read moreMoody’s Says U.S. Faces Aaa Cut Without Budget Deal in 2013

Delusional Reality: Everything Peddled By Politicians, Media, Banks And TV Is A Fiction

Delusional reality: Everything peddled by politicians, media, banks and television is a fiction (Natural News, Sep 6, 2012):

The “War on Terror” is a complete fabrication. There is no terrorism other than what the government creates in order to sell its agenda of a police state takeover. Click here to read Paul Craig Roberts’ article that lays this out in brilliant detail.

The CDC’s war on West Nile virus is also a complete fabrication. There is no real West Nile virus threat. (Read article here.) The odds of being killed by West Nile are, much like with “terrorism,” even lower than the odds of being killed by a bee sting.

The “economic recovery” of America is a fairy tale. Over the last few days, the federal debt reached a jaw-dropping $16 trillion — nearly $5 trillion of that debt has been incurred under one person: President Obama. Unemployment is at record highs. Half the population is on federal aid of one form or another. Food stamp costs have skyrocketed.

“Obamacare” is a fiasco. Dubbed the “Affordable Care Act,” in reality health insurance costs have vastly increased after the passage of this ill-conceived law.

Bin Laden wasn’t killed by U.S. Navy Seals. The war is a fake. The news is faked. The media is completely, utterly faked, running totally fictional stories. CNN is actually an elaborate theater operation, faking sets, locations, sound effects and everything else you can imagine. Don’t believe me? Watch this totally faked CNN broadcast from the Gulf War, featuring “journalist” Charles Jaco:
http://tv.naturalnews.com/v.asp?v=B55147E2052701412A47A9F2C9DA754C

The whole thing is so hilarious it’s almost an SNL skit! At one point, a fake air raid siren sounds off, indicating a biological weapons attack (total fear mongering on CNN), and one of the guests in the fake studio frantically straps on a HELMET! Yeah, because helmets are the defense of choice against biological attacks, it seems. See if you can actually watch this CNN video and not laugh out loud…

Newspapers run fake news like “organic foods are no healthier than conventional foods.” (http://www.naturalnews.com/037065_organic_foods_mainstream_media_psyo…)

The FBI plans and carries out fake terror plots all across the USA (http://www.naturalnews.com/034325_FBI_entrapment_terror_plots.html).

Read moreDelusional Reality: Everything Peddled By Politicians, Media, Banks And TV Is A Fiction

Moody’s Downgraded Nearly 300 US Municipals

Moody’s downgraded nearly 300 U.S. municipal issuers in the second quarter, the most for any quarter in more than a decade and the latest sign of the potential pressure building in the market where states and local governments raise money.

Local areas across the U.S. have been struggling for several years after the recession sharply undercut revenues, with three cities in California recently filing for bankruptcy in an attempt to alleviate their financial burdens.

Tax receipts have rebounded but not enough to compensate for rising costs, which include healthcare spending, social welfare and labor.

Read moreMoody’s Downgraded Nearly 300 US Municipals

S&P Downgrades 15 Italian Financial Institutions, Says Country Faces Deeper Recession Than Previously Thought

S&P Downgrades 15 Italian Financial Institutions, Says Country Faces Deeper Recession Than Previously Thought (ZeroHedge, Aug 3, 2012):

It is late in the afternoon on a Friday, which means one thing: it is time to dump all left over bad news under the rug. Sure enough, here comes S&P. From Bloomberg:

  • S&P CUTS RATINGS ON 15 ITALIAN FINL INSTITUTIONS
  • S&P TAKES RATING ACTIONS ON 32 ITALIAN FINL INSTITUTIONS
  • BANCA MONTE DEI PASCHI DI SIENA SPA CUT TO BBB-/NEGATIVE/A-3
  • BANCA POPOLARE DI MILANO SCRL CUT TO BB+/NEGATIVE/B BY S&P
  • S&P SEES ITALIAN BANKS’ VULNERABILITY TO CREDIT RISK RISING
  • S&P SAYS ITALY FACES POTENTIAL DEEPER RECESSION THAN IT THOUGHT

Full release:

Standard & Poor’s Ratings Services today said it has taken rating actions on 32 Italian financial institutions.

Read moreS&P Downgrades 15 Italian Financial Institutions, Says Country Faces Deeper Recession Than Previously Thought

UK Economic Outlook Slumps – UK May Lose Triple-A Rating If GDP Growth Continues To Disappoint, Warns Moody’s

UK economic outlook slumps on eurozone crisis (Guardian, July 31, 2012):
UK may lose triple-A rating if GDP growth continues to disappoint, Moody’s ratings agency warns

The UK’s economic outlook has weakened as a result of the eurozone debt crisis, Moody’s has said in a fresh blow to the chancellor George Osborne.

The ratings agency cut its forecasts for GDP growth, after figures last week showed the UK economy shrank by 0.7% in the second quarter – far more than expected.

Moody’s expects GDP to grow by just 0.4% this year and 1.8% in 2013, which is considerably more optimistic than many economists, who expect the economy to contract this year. Gerard Lyons at Standard Chartered said after the GDP figures were published: “I think it’s inconceivable that there will be positive growth this year.”

Moody’s warned on Tuesday that Britain could lose its triple-A rating if economic growth did not meet expectations, and if the country’s debt burden increased. It said the weaker economic environment could challenge the government’s efforts to reduce debt in the coming years.

Read moreUK Economic Outlook Slumps – UK May Lose Triple-A Rating If GDP Growth Continues To Disappoint, Warns Moody’s

Moody’s Downgrades Italy’s To Baa2 From A3, Negative Outlook (Full Text)

Moody’s Downgrades Italy’s To Baa2 From A3, Negative Outlook – Full Text (ZeroHedge, July 12, 2012):

Just like Spain before everyone took the country to a Sub-A rating, Fitch is once again the decider. S&P has Italy at BBB+, and Now Moody’s just took italy under A to Baa2; only Fitch is still at A-, outlook negative. When all three rating agencies go sub A, there is a 5% ECB repo hike as we explained back in April.

From Moody’s

Frankfurt am Main, July 13, 2012 — Moody’s Investors Service has today downgraded Italy’s government bond rating to Baa2 from A3. The outlook remains negative. Italy’s Prime-2 short-term rating has not changed.

The decision to downgrade Italy’s rating reflects the following key factors:

Read moreMoody’s Downgrades Italy’s To Baa2 From A3, Negative Outlook (Full Text)

77% Of JPMorgan’s Net Income Comes From Government Subsidies

77% of JP Morgan’s Net Income Comes from Government Subsidies (ZeroHedge, July 2, 2012):

JP Morgan’s credit rating would be much lower without government backing.

As Bloomberg noted last week:

JPMorgan benefited from the assumption that there’s a “very high likelihood” the U.S. government would back the bank’s bondholders and creditors if it defaulted on its debt, according to the statement. Without the implied federal backing, JPMorgan’s long-term deposit rating would have been three levels lower and its senior debt would have dropped two more steps, Moody’s said.

And as the editors of Bloomberg pointed out a couple of weeks ago:

JPMorgan receives a government subsidy worth about $14 billion a year, according to research published by the International Monetary Fundand our own analysis of bank balance sheets. The money helps the bank pay big salaries and bonuses. More important, it distorts markets, fueling crises such as the recent subprime-lending disaster and the sovereign-debt debacle that is now threatening to destroy the euro and sink the global economy.

Read more77% Of JPMorgan’s Net Income Comes From Government Subsidies

Moody’s Downgrades Credit Ratings Of 28 Spanish Banks By 1-4 Notches

Moody’s cuts ratings of 28 Spanish banks (RT, June 25, 2012):

Ratings agency Moody’s has cut the ratings of 28 Spanish banks following a June 13 downgrade of Spain’s sovereign rating by three notches.

The banks’ long-term debt and deposit ratings have been downgraded by one to four notches. The rating of Bankia, one the country’s largest banks, has been cut to junk status.

Moody’s Downgrades Spanish Banking Sector By 1-4 Notches (ZeroHedge, June 25, 2012):

The long anticipated downgrade of the recently bailed out Spanish banking sector has arrived. Moody’s just brought the hammer down on 28 Spanish banks. Also apparently in Spain banks are now more stable than the country: “The ratings of both Banco Santander and Santander Consumer Finance are one notch higher than the sovereign’s rating, due to the high degree of geographical diversification of their balance sheet and income sources, and a manageable level of direct exposure to Spanish sovereign debt relative to their Tier 1 capital, including under stress scenarios. All the rest of the affected banks’ standalone ratings are now at or below Spain’s Baa3 rating.” Can Spain borrow from Santander then? They don’t need the ECB.

Full Spanish Bank downgrade Matrix (pdf source):

Read moreMoody’s Downgrades Credit Ratings Of 28 Spanish Banks By 1-4 Notches

Moody’s To Junk The Entire Spanish Banking System In Hours

Moody’s To Junk Spanish Banking System In Hours (ZeroHedge, June 25, 2012):

Nearly two weeks ago we penned “These Three Spanish Banks Will Be Downgraded Tomorrow” which showed which banks had a rating higher than the sovereign following Moody’s long overdue Spanish downgrade, and thus were about to be downgraded by many notches. Today, after a ridiculously long delay whose only purpose was to buy time, Moody’s is about to junk virtually the entire Spanish banking sector, as was widely expected.The downgrade is expected to happen within hours.

From Expansion (google translated)

After cutting the rating of Baa3 and Spain to threaten to put Spanish debt at the level of junk bond no later than 30 days, has reviewed the notes of all banks. “We have reported a reduction of two or three notches (steps) to almost everyone. Do not look at individual financial statements of each entity. Do not discriminate, “added the sources.

Read moreMoody’s To Junk The Entire Spanish Banking System In Hours

Here We Go: Moody’s Downgrade Is Out – Morgan Stanley Cut Only 2 Notches, To Face $6.8 Billion In Collateral Calls

Here We Go: Moody’s Downgrade Is Out – Morgan Stanley Cut Only 2 Notches, To Face $6.8 Billion In Collateral Calls (ZeroHedge, June 21, 2012):

Here it comes:

  • MOODY’S CUTS 4 FIRMS BY 1 NOTCH
  • MOODY’S CUTS 10 FIRMS’ RATINGS BY 2 NOTCHES
  • MOODY’S CUTS 1 FIRM BY 3 NOTCHES
  • MORGAN STANLEY L-T SR DEBT CUT TO Baa1 FROM A2 BY MOODY’S
  • MOODY’S CUTS MORGAN STANLEY 2 LEVELS, HAD SEEN UP TO 3
  • MORGAN STANLEY OUTLOOK NEGATIVE BY MOODY’S
  • MORGAN STANLEY S-T RATING CUT TO P-2 FROM P-1 BY MOODY’S

But the kicker:

ONLY MORGAN STANLEY, HSBC CUT LESS THAN MOODY’S ORGINAL MAXIMUM.

And there you have it – the reason for the delay were last minute negotiations, most certainly involving extensive monetary explanations, by Morgan Stanley’s Gorman (potentially with Moody’s investor Warren Buffett on the call) to get only a two notch downgrade. And Wall Street wins again.

Recall, from MS’ 10-Q:

“In connection with certain OTC trading agreements and certain other agreements associated with the Institutional Securities business segment, the Company may be required to provide additional collateral or immediately settle any outstanding liability balances with certain counterparties in the event of a credit rating downgrade. At March 31, 2012, the following are the amounts of additional collateral, termination payments or other contractual amounts (whether in a net asset or liability position) that could be called by counterparties under the terms of such agreements in the event of a downgrade of the Company’s long-term credit rating under various scenarios: $868 million (A3 Moody’s/A- S&P); $5,177 million (Baa1 Moody’s/ BBB+ S&P); and $7,206 million (Baa2 Moody’s/BBB S&P). Also, the Company is required to pledge additional collateral to certain exchanges and clearing organizations in the event of a credit rating downgrade. At March 31, 2012, the increased collateral requirement at certain exchanges and clearing organizations under various scenarios was $160 million (A3 Moody’s/A- S&P); $1,600 million (Baa1 Moody’s/ BBB+ S&P); and $2,400 million (Baa2 Moody’s/BBB S&P).”

So instead of $9.6 billion, MS will face only $6.8 billion in collateral calls.


YouTube

Still the firm is not out of the woods:

Read moreHere We Go: Moody’s Downgrade Is Out – Morgan Stanley Cut Only 2 Notches, To Face $6.8 Billion In Collateral Calls

Big Bank Downgrade By Moody’s Imminent

Big Bank Downgrade By Moody’s Imminent (ZeroHedge, June 21, 2012):

Even as Moody is now about a week late on its Spanish bank downgrade where the banks are rated higher than the sovereign (which obviously is kept in check to prevent yields on bonds from soaring even more), here comes the next wholesale bank downgrade:

  • Moody’s expected to announce ratings downgrade for UK banks this evening – Sky Sources
  • Exclusive: Big news – I’m told Moody’s will announce downgrades of some of world’s biggest banks, incl in UK, after US mkts close tonight. – Sky’s Mark Kleinman

Looks like that fabricated 2 notch Margin Stanley downgrade (because 3 notches just won’t do – those 4 months of Gorman-led “negotiations” made that painfully clear) is about to strike. The real question is: What Would Egan Who Do?

From Sky:

Some of Britain’s biggest banks are poised to have their credit ratings downgraded by Moody’s as soon as tonight as part of a wider reassessment of the health of the global banking industry, I can reveal.

Moody’s is expected to outline its verdicts about the creditworthiness of banks including Barclays, HSBC, JP Morgan and Royal Bank of Scotland.

Read moreBig Bank Downgrade By Moody’s Imminent

Egan-Jones Ratings Company Downgrades Spain’s Credit Rating To CCC+ (Uganda’s Credit Rating Is B!)

Egan Who Just Gave Spain The Triple Hooks (ZeroHedge, June 13, 2012):

And so, the little rating agency that could, just gave Spain the triple hooks, downgrading the country from B to CCC+, negative outlook. As a reminder, the Uganda credit rating is B: it sure is no Spain.

From EJ:

Synopsis: KINGDOM OF SPAIN EJR Sen Rating(Curr/Prj) CCC+/ CC Rating Analysis – 6/13/12 EJR CP Rating: C Debt: EUR805.9B EJR’s 1 yr. Default Probability: 18.0% Spain continues to be weakened by high funding costs (6.75% for 10yr today), the gov. deficit of 9.6%, an estimated decline in GDP of 1.7% (per the Economy Ministry), the 24.4% unemployment, the IIF’s recent estimate of additional bank loan losses up to EUR260B, and possible depositor withdrawals. Over the past four fiscal years, that is from 2008 to 2011, Spain’s GDP declined from EUR1.09 trillion to EUR1.07 trillion. Meanwhile, its debt mushroomed from EUR519B to EUR806B. With the EUR100B infusion for Spain’s banks, the debt to GDP will rise to 90% plus future additions for the government deficit, support for its regions and additional support for its banks. Social benefits are a major problem; while payments to the govt have been down EUR 3B (2008 to 2011), payments from the government have been up EUR 29B). As a result, Spain is short about EUR50B per year for social payments, EUR35+B per year for interest, and an additional EUR 30B for asset growth; hence the EUR110+B per annum increase in debt. As we expected, Spain requested support for its banking sector and will probably need cash for weaker provinces. Assets of Spain’s largest two banks exceed its GDP. We are slipping our rating to ” CCC+ ” ; watch for more requests for support from the banks and money creation.

See also:

Nigel Farage: ‘Once Greece Leaves The ECB Is Bust’ – ‘The Euro Titanic Has Now Hit The Iceberg And Sadly There Simply Aren’t Enough Lifeboats’ (Video)

Fitch Downgrades Credit Rating Of 18 Spanish Banks, Financial Contagion Spreads To Italy

See also:

Spain Loses Final A Rating With Moodys Downgrade To Baa3, May Downgrade Further (Full Text)

Nigel Farage: ‘Once Greece Leaves The ECB Is Bust’ – ‘The Euro Titanic Has Now Hit The Iceberg And Sadly There Simply Aren’t Enough Lifeboats’ (Video)


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.

Read moreFitch Downgrades Credit Rating Of 18 Spanish Banks, Financial Contagion Spreads To Italy

Spain Loses Final A Rating With Moodys Downgrade To Baa3, May Downgrade Further (Full Text)

Don’t miss:

Nigel Farage: ‘Once Greece Leaves The ECB Is Bust’ – ‘The Euro Titanic Has Now Hit The Iceberg And Sadly There Simply Aren’t Enough Lifeboats’ (Video):


Spain Loses Final A Rating With Moodys Downgrade To Baa3, May Downgrade Further – Full Text (ZeroHedge, June 13, 2012):

And so the final Spanish A rating tumbles. Why is this kinda, sorta a big deal? Because as we explained in the end of April, “If all agencies downgrade Spain to BBB+ or below, the ECB could increase haircuts by 5% on SPGBs. The key aspect in terms of the Spanish downgrade(s) is the ECB’s LTRO. If all three rating agencies move Spain to BBB+ or below then under the ECB’s current framework it moves into the Step 3 collateral bucket which requires an additional 5% haircut across the maturities. In classifying its risk management buckets, the ECB uses the highest of the ratings to determine an asset’s position (unlike the sovereign benchmark indices which use the lowest rating, in general). Fitch and Moodys currently rate Spain at A and A3 respectively, with both having a negative outlook in place leaving only a small downgrade margin before Spain migrates to the lower ECB bucket.”

And now the collateral squeeze is on, unless of course the ECB changes the reules one more time.

Read moreSpain Loses Final A Rating With Moodys Downgrade To Baa3, May Downgrade Further (Full Text)

Moody’s Warns Of Spanish Downgrade, Threatens AAA-Countries In Case Of Grexit

Friday Dump Complete: Moody’s Warns Of Spanish Downgrade, Threatens AAA-Countries In Case Of Grexit (ZeroHedge, June 8, 2012):

First we got Spain miraculously announcing late at night local time, but certainly after close of market US time, that the bailout so many algorithms had taken for granted in ramping stocks into the close may not be coming, because, picture this, Germany may have conditions when bailing the broke country’s banks out, and Spain is just not cool with that, and now, after the close of FX and futures trading, we get Moody’s giving us the warning the after Egan-Jones, S&P, and Fitch, it is now its turn to cut the Spanish A3 rating.”As Spain moves closer to the need for direct external support from its European partners, the increased risk to the country’s creditors may prompt further rating actions. The official estimates of recapitalising Spain’s banking system have risen significantly and the country’s indirect reliance on European Central Bank (ECB) funding via its banks has been growing. Moody’s is assessing the implications of these increased pressures and will take any rating actions necessary to reflect the risk to Spanish government creditors. Moody’s rating on Spain is currently A3 with a negative outlook.” Moody’s also warns, what everyone has known for about 2 years now, that Italy could be next: “However, Spain’s banking problem is largely specific to the country and is not likely to be a major source of contagion to other euro area countries, except for Italy, which likewise has a growing funding reliance on the ECB through its banks.” Of course none of this is unexpected. What will be, however, to the market, is when all 3 rating agencies have Spain at BBB+ or below, which as ZH first pointed out at the end of April will result in a 5% increase in repo haircuts on Spanish Government Bonds, resulting in yet another epic collateral squeeze for the country which already is forced to pledge Spiderman towels to the central bank.

From Moody’s

Moody’s: Developments in Spain, Greece may prompt euro area sovereign rating downgrades

Read moreMoody’s Warns Of Spanish Downgrade, Threatens AAA-Countries In Case Of Grexit

Moody’s Downgrades Six German Bank Groups, And Their Subsidiaries, By Up To Three Notches

Moody’s Downgrades Six German Bank Groups, And Their Subsidiaries, By Up To Three Notches (ZeroHedge, June 5, 2012):

First Moody’s cut the most prominent Austrian banks, and now it is Germany’s turn, if not that of the most undercapitalized German bank yet: “The ongoing rating review for Deutsche Bank AG and its subsidiaries will be concluded together with the reviews for other global firms with large capital markets operations.

The full downgrade Matrix:

From Moody’s

Moody’s takes multiple actions on German banks’ ratings; most outlooks now stable

Frankfurt am Main, June 06, 2012 — Moody’s Investors Service has today taken various rating actions on seven German banks and their subsidiaries, as well as one German subsidiary of a foreign group. As a result, the long-term debt and deposit ratings for six groups and one German subsidiary of a foreign group have declined by one notch, while the ratings for one group were confirmed. Moody’s also downgraded the long-term debt and deposit ratings for several subsidiaries of these groups, by up to three notches. At the same time, the short-term ratings for three groups as well as one German subsidiary of a foreign group have been downgraded by one notch, triggered by the long-term rating downgrades.

Read moreMoody’s Downgrades Six German Bank Groups, And Their Subsidiaries, By Up To Three Notches