From Expatica.com:Moody's sliced Spain's credit rating Thursday and warned it may do so again, pounding financial markets as it raised the alarm over Spanish banking woes and spendthrift regions.
New York-based Moody's cut the long-term debt rating by a notch to "Aa2" with a negative outlook, a serious setback to Spain's efforts to quell fears it may need an international financial rescue.
The downgrade came on the eve of a eurozone summit in Brussels to discuss bolstering the euro's defences amid growing speculation that weak member states such as Portugal may follow Ireland and Greece and need massive bailouts.
Spain's government bristled at the decision.
Moody's could have resolved its doubts over the cost of recapitalising the banks "simply by waiting until this afternoon for the Bank of Spain to confirm the necessary amounts," Finance Minister Elena Salgado said.
The finance minister agreed however that more should be done to control spending by semi-autonomous regional governments.
Markets tumbled after the Moody's announcement, which followed a three-month review of Spain's credit. The agency withdrew its top-notch "Aaa" rating from Spain in September, a few months after its rivals Standard & Poor's and Fitch had done so.
The euro traded at $1.3828 a few hours after the Moody's downgrade from $1.3868 beforehand. The Madrid stock market's IBEX-35 index slipped 1.30 percent to 10,422.0 in early afternoon.
The annual interest rate, or yield, demanded by the market in return for buying Spanish 10-year bonds rose to 5.51 percent from the previous day's close of 5.48 percent, approaching what are seen as punitive levels at six percent.
Moody's Investors Service expressed scepticism about Madrid's assumption it can clean up savings banks' balance sheets at a cost of less than 20 billion euros ($28 billion).
"The eventual cost of bank restructuring will exceed the government's current assumptions, leading to a further increase in the public debt ratio," it said in a statement......read on
No comments:
Post a Comment