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’What *will* you do, S&P?
As has been noted everywhere, the debt deal approved by the US House of Representatives on Monday night holds little promise of achieving the $4,000bn in spending cuts that ratings agencies are thought to be wanting.
Snap news
Breaking pre-market news on Monday,
- S&P says Greek rollover plan may put Greece in select default — report.
- Rak Petroleum and DNO International to merge assets ahead of London stock market listing — statement.
[Update] Sign of the times, Greek MP evacuation edition
UPDATE: Hands up — this correspondent needs to eat a bit of crow now, having been much too credulous about running the passage below. Thanks to blogger and commenter Lolgreece for pointing out that the original story’s sources are too thin,
At the outer edge of ratings territory
A few, final thoughts on the negative outlook for the USA from Jan Hatzius and his team at Goldman Sachs.
First they look at the somewhat confusing market reaction — Treasuries were remarkably resilient following the move by S&P:
Better the quality collateral you know?
Not even an S&P warning over the state of the US debt pile has been enough to take the shine off US Treasuries.
On Monday, 10-year US yields actually ended up falling (after briefly rising) following the credit rating agency’s announcement:
Bob Janjuah – told you so America
Nomura’s sceptical strategist Bob ‘the bear’ Janjuah is feeling very pleased with himself, following S&P’s decision to revise its long term outlook on the USA to “negative”.
As well he might.
Only last week Bob wrote the following:
CMBS issuance update and the B-piece buyer problem
In search of further proof that the CMBS market is back, FT Alphaville stopped by a presentation on the topic hosted by S&P on Tuesday. We’re planning a deeper look into CMBS later, but for now here are some data points and trends related to issuance that we picked up while we were there:
DeKalb County, Georgia on municipal minds
On Friday S&P stressed its March 29 five-notch downgrade of the GO and appropriation-backed debts of DeKalb County, Georgia was “not the canary in the coal mine, but more the anomaly”.
But in a municipal market report also out on Friday,
One step from high yield – Portugal
More on Tuesday’s downgrade of Portugal (and, to a lesser extent, Greece) from the excellent Harvinder Sian at RBS.
He reckons S&P are spot on with their decision to cut Portugal to BBB- (with the ratings outlook negative) and says there a real risk of a downgrade to junk.
Japan’s silver linings
For Japan, at least, there was a silver lining to Egypt’s gargantuan cloud, which swept the media fall-out from last week’s S&P’s downgrade of Japan’s debt rating right off the front pages.
Another glittering lining emerges from the downgrade itself,
More bad news for Greece
Fresh out of S&P this evening:
* We are assessing the credit implications of the proposed European Stability Mechanism (ESM) that may govern EU sovereign bonds beginning in July 2013.
* Specifically,
Munich Re must be a little relieved
Charts from Nomura (click to enlarge), which emphasise gross peripheral exposure for insurers here (and apparently show the sector’s overall exposure is limited).
Perhaps one quibble over Aviva’s figures though.
Ireland downgraded by S&P
And this time, we seriously doubt that the National Treasury Management Agency will complain about S&P’s unfair estimates.
Earlier on Tuesday, RTÉ had reported the €85bn size of the facility offered by the EU and IMF to the Irish government,