Eurozone's credit ratings face cuts
Source: Bloomberg News |
June 13, 2012, Wednesday
|
Print Edition
Print Edition
SOVEREIGN credit ratings inside the eurozone, including those of AAA nations, risk downgrades as policymakers fail to demonstrate they can end the region's debt crisis, Fitch Ratings said.
Ratings in the currency bloc are under "strong downward pressure," Fitch Managing Director Ed Parker said at an event in Oslo yesterday. If there's "no light at the end of the tunnel soon," the risk of a breakup of the 17-member eurozone will rise, he said. Policymakers are likely to continue "muddling through" and the "last minute" solutions are raising the cost of managing the crisis, he said.
Eurozone leaders presented the bloc's fourth bailout at the weekend as Spain sought as much as 100 billion euros (US$125 billion) to rescue its banks. The deal was pieced together ahead of Sunday's elections in Greece that may result in Europe's most indebted nation exiting the currency bloc as anti-austerity parties rail against bailout terms.
Yields on debt sold by Spain, Italy and Greece rose yesterday. Spain's 5.85 percent note due 2022 sank as the yield jumped 14 basis points to 6.65 percent. Borrowing costs on similar-maturity Italian notes rose 10 basis points to 6.13 percent. German 10-year yields gained eight basis points to 1.38 percent.
"We have done an assessment of the recapitalization needs of the Spanish banking sector and we think, in our base case, we need 50 billion euros to 60 billion euros," Parker said in an interview after his prepared comments. "In a stressed, kind of Irish severe stress test, the figure might be as high as 90 billion euros to 100 billion euros," he said. "So the package that was announced on the weekend is sufficient for that assessment. We see it as a positive step that can help to stabilize things."
The "key concern" remains the risk of contagion should Greece exit the euro, Parker said. While the direct impact of the nation's departure would be small, a disorderly exit could also hurt the ratings of the euro region's AAA rated nations, he said.
Ratings in the currency bloc are under "strong downward pressure," Fitch Managing Director Ed Parker said at an event in Oslo yesterday. If there's "no light at the end of the tunnel soon," the risk of a breakup of the 17-member eurozone will rise, he said. Policymakers are likely to continue "muddling through" and the "last minute" solutions are raising the cost of managing the crisis, he said.
Eurozone leaders presented the bloc's fourth bailout at the weekend as Spain sought as much as 100 billion euros (US$125 billion) to rescue its banks. The deal was pieced together ahead of Sunday's elections in Greece that may result in Europe's most indebted nation exiting the currency bloc as anti-austerity parties rail against bailout terms.
Yields on debt sold by Spain, Italy and Greece rose yesterday. Spain's 5.85 percent note due 2022 sank as the yield jumped 14 basis points to 6.65 percent. Borrowing costs on similar-maturity Italian notes rose 10 basis points to 6.13 percent. German 10-year yields gained eight basis points to 1.38 percent.
"We have done an assessment of the recapitalization needs of the Spanish banking sector and we think, in our base case, we need 50 billion euros to 60 billion euros," Parker said in an interview after his prepared comments. "In a stressed, kind of Irish severe stress test, the figure might be as high as 90 billion euros to 100 billion euros," he said. "So the package that was announced on the weekend is sufficient for that assessment. We see it as a positive step that can help to stabilize things."
The "key concern" remains the risk of contagion should Greece exit the euro, Parker said. While the direct impact of the nation's departure would be small, a disorderly exit could also hurt the ratings of the euro region's AAA rated nations, he said.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
