Moody’s unleashes its updated ratings on European countries, Spain again falls victim

Standard & Poor (S&P) released its updated ratings of the  European countries last month, which were disappointing. Now Moody’s has unleashed its ratings that are even more hurting.

The reason rating agencies believe is the incipient recession and the slow response of the European leaders to erode the solvency due to the public debt in most of the Euro area. And, as has happened many times in the financial crisis the criterion of the agencies, that put a note to the bonds, meets is not mimetic. This time, the ratings cut by Moody’s announced last night affects six euro area countries. Spain, Italy and Portugal did not manage to evade the downgrading.

Due to the crisis, the ratings of the sort were expect of Moody’s. However, despite the measures taken by European Central Bank in the last few weeks, the ratings remained unaffected. But in any case, the country that fared worst of Moody’s reviews was Spain, the only one that slipped down two steps in the race. Portugal, though, remains in a delicate situation (Ba3), with the mark that the junk bond market translates. The position of Spain goes from A1 (marked H) to A3 (remarkably low), which is the sixth step in the list of Moody’s ratings.

In January, S & P also downgraded two Spanish debt levels (from AA-to A), but extended that decision to Portugal, Italy and Malta, which Moody’s has degraded to one step. And a week ago, Depues Fith downed Spain two notches from AA-to A.

In a statement issued last night, Moody’s pointed to two key factors to be more severe in Spain than the rest of the continent. S&P estimated that the budgetary slippage in 2011, with a deficit above 8% this year will prevent that balance beyond the “5.5% or 6% of GDP”, far from the target of4%, and the recession that hit the Spanish economy with more force. Moody’s results was a result of a decline in GDP of between 1% and 1.5%. “In two years, the level of public debt of Spain, one of its main factors in the crisis, has exceeded 80% of GDP,” said the statement.

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Posted by Usman Khalid on Feb 14 2012. Filed under Europe, World. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.