Thursday, 01 July 2010 09:00

As Anticipated By Our Analyisis, Moody's Puts Spain on Downgrade Watch

From Moody's Puts Spanish Debt on Review for Downgrade

Moody's said on Wednesday that it may cut Spain's Aaa local and foreign currency government bond ratings by as much as two levels after a three-month review.  Moody's [MCO  19.92    -0.09  (-0.45%)   ], the only major rating agency that still holds a top rating for Spain, said the possible downgrade reflects deteriorating short-term and long-term economic growth prospects, and the challenges Spain faces in achieving its fiscal targets.  The rating agency also cited concerns over the impact of rising funding costs over the medium term.  "If at the conclusion of the review, Spain's ratings are lowered, it would most likely be by one, or at most two, notches," Moody's said.  Fitch Ratings cut Spain's credit ratings to AA-plus, the second highest level, from AAA on May 28, saying its economic recovery would be more muted than a government forecast, pushing world equities and the euro [EUR=X  1.2294    0.0061  (+0.5%)   ] lower.

Just two days ago, I reviewed the debacle to be that was Spanish banking system and closely related Spain public finances in The Hypocrisy that is Known as the Spanish Banking System. I also issued warnings two months ago and as early as January, 2009. Those who held on to those that bearish BBVA and STD positions that we recommended are being paid rather handsomely.

As We Have Warned, the Fissures Are Widening in the Spanish Banking System Monday, May 24th, 2010

I have made our position on Spain clear through a complete forensic review of the state’s finances for subscribers: Spain public finances projections_033010. An excerpt from this subscription document (subscribers, reference page 2) shows the euphoric, yet highly unrealistic optimism upon which Spain has built its fiscal austerity projections.

spain finances excerpt

As suggested in the document, if one refers to the blog post Lies, Damn Lies, and Sovereign Truths: Why the Euro is Destined to Collapse!, you will find that not only has Spain apparently fabricated a fairy tale of potential prosperity based upon the projections of the IMF and EC, but the IMF and EC have been nothing but fairy tale projections themselves.

I have been bearish on the Spanish banking system since January of 2009 (reference Reggie Middleton begin_of_the_skype_highlighting     end_of_the_skype_highlighting on the New Global Macro – the Forensic Analysis of a Spanish Bank ), and after a trip to the Costa del Sol by way of Málaga during the boom times are shortly thereafter, the reasons should be most obvious.

We now have a rash of new Spanish bank and sovereign research which has returned between 300% and 400% over the last few months.

std opt. research time purchase

Needless to say, as the situation in the EU deteriorates upon the widespread dissemination of the knowledge that BoomBustBloggers have been trading off of for quarters now, I feel the options will spike in value significantly!

Readers should also reference :

As We Have Warned, the Fissures Are Widening in the Spanish Banking System

Why Does Everyone Believe Spain Is About To Run To the EU/IMF For Help? It’s Math, Not Speculation!

Throw a Little Conspiracy Theory into the Pan-European Sovereign Debt Crisis and an Impending Spanish Bank Collapse and Who Needs TV For Entertainment?

Subscribers should review the ample Spanish research we have amassed on the crisis, its origins and opportunities avaiable:

Those who don't subscribe should be sure to peruse our entire collection of free analysis on the Pan-European Sovereign Debt Crisis.

Last modified on Thursday, 01 July 2010 09:00