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’Hungary for junk?
Gosh, Hungary divides sentiment. (It has also, just as we went to pixels, been stripped of its last investment-grade rating by Fitch.)
Despite our saying not once but twice that Hungary isn’t running out of money in its current crisis,
Fitch downgrades a slew of investment banks
Fitch follows S&P and downgrades a gaggle of investment banks.
Unlike S&P, however, this isn’t down to a change in methodology. Rather, as our emphasis below suggests, the rating agency argues that the banks aren’t as protected in “periods of exogenous financial stress”
Snap news
Breaking pre-market news on Friday,
- Jupiter says assets under management proved resilient in face of significant declines in world equity markets — statement.
- Asos confidence of meeting market forecasts — statement.
S&P and Fitch downgrade Spanish banks
Where the sovereign goes, the banks follow. (And vice-versa, of course.)
Fitch and S&P downgraded a slew of Spanish banks on Tuesday evening. The rating rationales are pasted below.
There’s probably little new information here to FT Alphaville readers but a few things caught our eye and we’ve highlighted the excerpts accordingly.
Fitch downgrades Spain and Italy
Fitch gives an unwelcome weekend parting gift to traders and hacks with dual downgrades on Friday afternoon of Spain and Italy. Portugal was given a stay of execution, according to Bloomberg.
Start with Italy,
More on the Fitch reaffirmation
We were as relieved as anyone that Fitch, as expected, declined to follow S&P’s lead on Tuesday, but here’s a chart that nevertheless gave us something to ponder:
It shows the results of a sensitivity analysis tucked away near the back of Fitch’s full report,
Squaring the Greek circle
The ratings agencies have left no one in any doubt where they stand on a voluntary rollover of Greek bonds.
Overnight from Reuters:
Fitch Ratings said on Tuesday that it would regard both a Greece sovereign debt swap and a rollover of maturities,
The T-bill that broke America’s credit [updated]
Hypothetically, obviously. At this stage.
Its CUSIP number is 9127953B5.
It was issued on 2 March 3 February 2011.
And it currently pays investors a princely yield of 0.018 per cent, for the (ahem) ‘risk’ of holding it.
Snap news
Breaking pre-market news on Friday,
- Espírito Santo Financial terminates its contract with Fitch — statement.
- National Grid to review details of disappointing Niagara Mohawk rate case — statement.
Citi sees no bubbles
At least not yet.
Although perhaps best to look away if you’re loaded up on US junk bonds, or Chilean and Indonesian equities in your portfolio.
Charts via Citigroup’s Global Bubble Tracker, as compiled by Robert Buckland’s equity strategy team (click to enlarge):
Fitch on how sovereign CDS helps fund deficits
Memo to financial regulators who want to ban or limit CDS:
Fitch Solutions finds that the liquidity of a sovereign’s credit default swap (CDS) is highly correlated with the level of the underlying bond yield.
Proof of cashflow, please
Jules Kroll — the man behind one of the best-known security and industrial espionage investigation firms Kroll — is taking to the ratings business, reports the WSJ.
And if Kroll’s other line of work is anything to go by,
Who’s not trading with BP?
Tuesday’s six-notch rating downgrade of BP by Fitch to BBB, appears to have spooked some of the firm’s oil trading counterparties.
According to Reuters, Bank of America Merrill Lynch supposedly told traders to stop entering any new oil trades with BP that extend beyond June 2011.
Fitch slashes BP rating to BBB from AA
Fitch cut BP’s credit rating a full six notches to BBB from AA on Tuesday.
The agency also set its rating watch on BP to ‘evolving’ from negative, as credit risks from the Deepwater Horizon spill remained unclear.