Alvise Lennkh (Scope Ratings) | It is unlikely that the minority government led by the PSOE significantly reduce the structural deficit and debt of Spain, while the proposal for partial repeal of previous labor market and pension reforms could adversely affect employment and sustainability of the pension system. This government coalition does not have a parliamentary majority and, therefore, depends on the support of other parties to pass each law, starting with the next general budget, which will be crucial for the credit rating of Spain (currently in A- / Stable).
Scope Ratings | Socialist Party leader, Pedro Sanchez, has barely a week to secure a parliamentary majority or risk returning to the ballot boxes for the fourth election in as many years.
Alvise Lennkh & Dennis Shen (Scope Ratings) | Political events in Spain (undecided), Portugal (stable) and Italy (divided) have implications for the three countries, visible in their divergent capacity to reduced the high levels of public debt.
Standard and Poor’s maintained Spain´s rating without changes, at A- with positive perspective. Among the reasons: the uncertainties over the next elections and the tensions in Catalonia.
The credit ratings agency Standard & Poor’s Global Ratings has begun to raise some Spanish companies’ ratings, which was expected after it improved its rating on the country from “BBB+/Positive” to “A-/Positive” on March 23. Bankia, Mapfre and state-owned Cores are the three chosen firms.
In January, Spain terminated its contract with S&P (tired of paying for being knocked done by the ratings agency). S&P then replaced its management team in Spain and now, in March, of its own accord, – because Spain did not ask for the qualification – decided, last Friday, to raise its credit rating on the country by one step, to A- from BBB+, with a “positive” outlook.