Just as your risk of a dodgy bailout is determined by your size so too, perchance, is your risk of an odd ratings action. On Tuesday Slovenia’s credit rating was junked by Moody’s, forcing it to call off a planned US dollar debt sale.
Those we have talked to are pretty baffled by this one. Not only does the timing seem strange but the critiques leveled are questionable (more on that below) particularly when you take into account the depth of the cut from Baa2 to Ba1. Read more
That’s the considered opinion of Julian D. A. Wiseman (most recently head of UK rates strategy at Société Générale but writing on his personal blog here) on the Monday after Moody’s cut its credit rating for the UK from Aaa to Aa1, taking the Bank of England down with it. For those keeping count, that makes it a downgrade that was neither surprising, nor informative nor, in itself, damaging (as Martin Wolf put it)… but more to the point it was just plain silly. Read more
Not many people seem bothered by France’s overnight downgrade by Moody’s. The euro shrugged and French bond yields crept upwards at a snail’s pace.
But one place the downgrade might have a real and lasting impact is within the Swiss National Bank. They have a predilection for core eurozone bonds and the downgrade might just prompt them to ditch what holdings they have and/or stop loading up on French debt.
That’s Spain’s 10yr spread over German Bunds dropping below 400 points for the first time since the start of April:
Spanish 10yr fell to 5.547 with Bunds touching 1.5864.
Probably something to do with Moody’s qualified endorsement: Read more
The Oliver Wyman report landed last week. The headline was that Spain’s banks would need almost €60bn in new capital and that seven out of the 14 Spanish banks under review failed the ‘bottom up’ test.
The actual recap figure was €59.3bn, falling to €53.7bn because banks are allowed to count in both mergers in which they’re involved and deferred tax assets. We expressed some scepticism about those DTA’s and the rather hopeful proposition that… Read more
Spain has been grabbing the headlines all this week and while it may be Friday afternoon, the excitement isn’t over just yet. Moody’s is widely expected to announce whether it’s going to downgrade Spain’s Baa3 credit rating (possibly to junk) Friday after the European markets close. Oliver Wyman’s second audit of the country’s banking system should come out around the same time.
Ahead of all that we wanted to talk you through a quick recap of the latest developments because, as UBS strategist Justin Knight rightly points out, “the areas of concern are now becoming numerous” and it’s making the question of when Spain might request aid increasingly complex. Read more
Finland is a rare stable Aaa-rated credit in the eurozone, according to the ratings agency, which placed Germany, the Netherlands and Luxembourg on a negative outlook.
Possible contingent liabilities from rescuing Spain and/or Italy loomed large. Read more
Key sentence is “senior resignations at the bank and the consequent uncertainty surrounding the firm’s direction are negative for bondholders”, although they add that recent events could be positive over the long term. Below is the full statement:
Moody’s changes outlook on Barclays’ standalone rating to negative Read more
Spanish banks have been downgraded by Moody’s because of their counterparty exposure to the sovereign that backstops them which itself just had its credit rating downgraded by Moody’s because of its pledge to support the banks on which it depends for LTRO funding.
Or something. Read more
UPDATE: Cyprus downgraded too — see below.
Just last Friday, Moody’s warned: Read more
We already knew we’d have to watch for a Spanish banking bailout request tomorrow.
Now comes Moody’s with a report warning that “recent developments in Spain and Greece could lead to rating reviews and actions on many of the euro area countries” — and offering a generally downbeat if less-than-original assessment of the euro zone’s future in general. Read more
Who doesn’t like a good dataset?
As markets wade into the second quarter of 2012, reflect for a moment on the fact that the crisis sparked by subprime mortgages now has nearly five years’ worth of observational data. This is very exciting
for nerds, since the conclusions from studying the period will get progressively more meaningful and insightful — something not lost on the credit strategy team at Deutsche Bank when they published their 2012 Default Study on Monday. Read more
Not a huge deal, but one to file away for May lest bank stakeholders get complacent after the recent stress test results.
We vaguely remember some people getting caught a little off guard when S&P downgraded a slew of banks last November because of a methodology change. Read more
Moody’s ratings of Credit Suisse, Morgan Stanley and UBS are set to fall up to three notches after the ratings agency announced reviews of both European banks, and global banks and securities firms with credit market operations. Some banks, of course, fall into both categories and will be reviewed on both counts.
There were several statements, so rather than pasting them all in full, here are a few highlights. Read more