Spanish debt challenges the agencies’s ‘implicit’ ratings

By Julia Pastor, in Madrid | The rating agencies never rest, much less when they talk about those countries suffering the most. Specifically, Fitch and S&P have been looking at Spain. The first has warned that it will probably downgrade Spain’s solvency rating by one or two notches by the end of January. According to Fitch, and even though its analysts admit the good will of the new government’s fiscal austerity efforts, they are not quite sure about Rajoys’s team capacity to efficiently solve the real state boom heritage, as well as to control the regional deficit.

On the other hand, S&P, which reduced the debt ratings of nine European Union countries just a few days ago, thinks that giving Spain a rating of A or five notches above the top mark is ‘generous’, because the real Spain’s debt price is at junk bonds level. As Myriam Fernández de Heredia, S&P’s general director of Europe and Africa sovereign ratings, explains:

“This gap is due to the Spanish debt ‘implicit ratings’.

Apart from official or ‘implicit’ ratings, the fact is that the Spanish debt has beat its expectations again on Thursday. The Treasury expected to place between €3.5bn – €4.5bn in 4, 7 and 10 years bonds, and it finally sold more than €6.6bn, as well as reduced the 10-year yield to 5,4% from previous 7%.

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

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