Spain’s credit rating downgraded two notches by Fitch

October 7, 2011 by · Leave a Comment
Filed under: Credit News 

Contagion looks to be spreading.  I don’t like that financial terminology, sounds creepy.  Like who would want to get contagion?  As each of these countries credit ratings get cut, we will see their borrowing cost increase and that will put more pressure on the banks.  Fitch mentioned in the article that the outlook was negative, so I am assuming they do see a Greek default and maybe even more.

Maybe Greece just can’t pay their bills and entitlements vastly outstrip the Greeks ability to tax.   That means the EU should just bail them out if they can or just get the default over with if it is eminent.  When it smells bad, sometimes you just have to hold your noise and go in.  It is just another case of a borrower having more debt than they can service but they don’t want to tell you because it will be a hassle and someone might get hurt.  You just have to know that sometimes it has to hurt to get better and putting it off in procrastination usually makes things worst and more uncontrollable.

Bloomberg (Emma Ross-Thomas) – Spain had its credit rating cut two levels by Fitch Ratings, which cited the “intensification” of the euro crisis, slower Spanish growth and regional finances as risks to the nation’s debt outlook.

Fitch cut its rating to AA- from AA+, the company said in a statement today from London. The outlook is negative. Fitch cited similar reasons for also downgrading Italy one level to A+, while maintaining Portugal at BBB-, saying it would complete a review of that ranking in the fourth quarter.

Spain’s rating, which was AAA until 2010, has now been lowered twice by Fitch as the deepest austerity measures in three decades fail to convince investors the nation can stem the surge in its debt burden. Moody’s Investors Service also warned on Oct. 4 “all but the strongest euro-area sovereigns” are likely to see further downgrades, as it cut Italy’s rating for the first time in almost two decades.

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