PORTUGAL and GREECE ratings cut by S&P

JamesU

Nice set of Eurostats on GDP, deficits and debt of countries. Irrespective of market sentiment, to me the UK postion (debt 70% GDP, deficit 12% GDP) looks just as bad as Spain (debt 53% GDP, deficit 11.2% GDP).

http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/2-22042010-BP/EN/2-22042010-BP-EN.PDF

JamesU

tara747

QUOTE: JP45

The world has already used up its fiscal and monetary ammunition. What happens if there is a fresh shock?

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This is a question I have asked myself, and I really don't know the answer. Although maybe I do... :eek:

Degenerate

JamesU wrote: »

Nice set of Eurostats on GDP, deficits and debt of countries. Irrespective of market sentiment, to me the UK postion (debt 70% GDP, deficit 12% GDP) looks just as bad as Spain (debt 53% GDP, deficit 11.2% GDP).

http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/2-22042010-BP/EN/2-22042010-BP-EN.PDF

JamesU

The UK is able to set appropriate monetary policy for itself.
UK GDP is in recovery, generating increasing tax revenues.
UK unemployment rate is way lower than Spain and may already have peaked.
There aren't any new-build ghost towns in the UK.

JamesU

Degenerate wrote: »

The UK is able to set appropriate monetary policy for itself.
UK GDP is in recovery, generating increasing tax revenues.
UK unemployment rate is way lower than Spain and may already have peaked.
There aren't any new-build ghost towns in the UK.

That puts it into perspective for me for sure. Thanks!

JamesU

worldtraveller

This isn’t the best week to borrow if you’re a highly-indebted country on Europe’s periphery. But that’s exactly what Portugal and Spain are doing this week in two bond sales that are worth watching for signs of contagion from Greece’s problems.

Today, Portugal is selling €500 million of short-term Treasury bills, with results due imminently. Spain is selling debt on Thursday that matures in five years.

Last week, Standard & Poor’s Ratings Services cut both countries’ credit ratings, sparking a sell-off across global markets as investors feared that Greece’s woes are spreading throughout Europe. Yesterday, that sell-off continued due to unfounded rumors of a Spanish request for an IMF bailout. Spanish and Portuguese stock markets were hammered, especially the countries’ banks.

Today, European markets remain on edge. The pan-European Stoxx 600 Index is down 0.2% after falling much harder earlier this morning, while the euro is again below the key $1.30 market level against the dollar, at $1.2977. If the euro stays below $1.30, it could very well head lower to $1.20. Meanwhile, the cost to insure against debt defaults in Greece and Spain have hit fresh records today ($857,000 and $229,000 a year, respectively).

With markets so nervy, some companies may start pulling planned borrowings from the private markets.

If a European country cancels, that might be even more worrying.

WSJ MarketBeat

inspector_monkfish

13:34 05May10 EUR GOVTS: Moodys Put Portugal On Downgrade Watch, New Highs

London, May 5

Moodys have placed Portugal on watch for possible downgrade,
excepted to be a one or two notch affair at most. That would leave Portugal at
either AA3 or A1, still above the S&P rating of A-. Bunds are up to new highs at
126.27 on the news with 10-yr yields down to 2.88%. Portuguese bonds slow to
react however with 10-yr spreads to Germany just a touch wider so far, last
23bps cheaper on the day at +289bps.

worldtraveller

Moody's Investors Service slashed Greece's credit rating to junk status on Monday in a new blow to the debt-ridden country that is under intense international scrutiny after narrowly avoiding default last month.

A Moody's statement said it was cutting Greece's government bond ratings by four notches to Ba1 from A3, with a stable outlook for the next 12-18 months. It was the second of the three major agencies to accord Greek bonds junk status. Standard & Poor's did the same in late April.

The downgrades reflect concern that the country could fail to meet its obligations to cut its deficit and pay down its debt — which the Greek government says is out of the question.

Finance Ministry officials in Athens had no immediate reaction to the rating cut, which came as a delegation from the International Monetary Fund and the European Union started an interim review of the country's efforts to pull itself out of a major debt crisis.

After amassing a vast public debt and overspending that sent its budget deficit spiraling to 13.6 percent of gross domestic product in 2009, Greece was saved from defaulting on its loans in May by the first installment of a joint EU and IMF euro110 billion bailout. It is to receive the second in September, pending implementation of a major austerity program that has sparked strong union reaction and a series of damaging strikes.

"The Ba1 rating reflects our analysis of the balance of the strengths and risks associated with the Eurozone/IMF support package," said Moody's lead analyst for Greece Sarah Carlson.

AP