Spain’s banking sector rejected with some simple data at hand the domino-effect buzz renewed after Italian sovereign bonds were hit on Tuesday by a Standard&Poor’s downgrade. In fact, the only Spanish banks with Italian debt are BBVA and La Caixa.
This comment comes from Ahorro Corporación Financiera analysts in Madrid:
“In the early hours of the morning, ratings agency S&P reduced the rating of Italy’s sovereign debt from A + to A, with a negative outlook. Spanish banks barely hold Italian bonds in their portfolios’ balance sheets.
The only financial institutions with some exposure would be BBVA andLa Caixa, with a total declared exposure of €3.898bn (of which €1.901bn are available-for-sale assets and €1.712bn at maturity) and €1.269bn (of which €1.210bn are of available-for-sale type).
Given that the differential of the Italian 10-year bond compared to the German is 382 bp, by discounting a much higher probability of default than the rating given the downgrade should theoretically have no impact on BBVA stock price today.”