Moody's
cuts ratings of 28 Spanish banks
Ratings
agency Moody's has cut the ratings of 28 Spanish banks following a
June 13 downgrade of Spain's sovereign rating by three notches.
RT,
26
June, 2012
The
banks' long-term debt and deposit ratings have been downgraded by one
to four notches. The rating of Bankia, one the country’s largest
banks, has been cut to junk status.
Moody’s
cited two main factors behind the move: the agency’s assessment of
Spain's reduced creditworthiness, and an “expectation that the
banks' exposures to commercial real estate (CRE) will likely cause
higher losses, which might increase the likelihood that these banks
will require external support.”
Spanish
banking problems have become the major problem for the euro zone
after the collapse of the Spanish housing sector in 2008 created a
huge number of bad debts.
The
Spanish government has formally requested European aid of up to €100
billion for its troubled banking sector.
“The
final amount of the financial assistance would be estimated later but
should be enough to cover all the banks' needs and add some buffer
from potential risks”, the country’s Economy Minister Luis De
Guindos said in the letter to Eurogroup head Jean-Claude Juncker.
The
funds will be made available to Spain’s own bank bailout fund, the
FROB, and then will be transferred to the banks, according to de
Guindos. Further details will be announced July 9 as an official a
Memorandum of Understanding for the package will be issued.
Meanwhile
independent auditors revealed the results of a check on Friday saying
Spain's banks would need about 62 billion euros in the worst case
scenario, far less than 100 billion package asked for by the
Government.
On
June 13 Moody's slashed Spain's sovereign credit rating by three
notches from A3 to Baa3, and said it had placed the country "on
review for further downgrade."
On
Monday the yield on the country's 10-year bonds has surpassed 7
percent, the level that pushed Ireland, Portugal and Greece to the
breaking point, although it now has fallen back to a still alarming
6.5 percent or so.
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