SPAIN: Morning commuters and Madrid's stock market react negatively to Moody's downgrade of Spain's sovereign debt almost to junk status

Record ID: 786574

  • Title: SPAIN: Morning commuters and Madrid's stock market react negatively to Moody's downgrade of Spain's sovereign debt almost to junk status
  • Date: 15th June 2012
  • Summary: NEWSPAPERS ON DISPLAY/FRONT PAGE OF GOVERNMENT-LEANING "LA RAZON" WITH PHOTO OF SPANISH PRIME MINISTER RAJOY AND HEADLINE READING (SPANISH): "THE EURO'S PUZZLE" FRONT PAGE OF CONSERVATIVE-LEANING "EL MUNDO" WITH HEADLINE (SPANISH) READING: "MOODY'S DOWNGRADES SPAIN'S DEBT ALMOST TO JUNK LEVEL "EL PAIS" AND "EL MUNDO" ON DISPLAY VARIOUS OF FRONT PAGE OF LEFT-LEANING "EL P
  • Embargoed: 30th June 2012 13:00
  • Keywords:
  • Location: Spain
  • Country: Spain
  • Topics: Economy,Politics
  • Reuters ID: LVAD01M4EAI60H32IF2KIYR98WYZ
  • Story Text: Morning commuters and Madrid's stock market reacted on Thursday (June 14) to credit ratings agency Moody's decision to downgrade Spain's debt by three notches to almost junk status.
    Moody's announced the downgrade from Baa3 from A3 on Wednesday (June 13) night, saying the newly approved euro zone plan to help Spain's banks will increase the country's debt burden.
    Moody's, which also said it could lower Spain's rating further, cited the Spanish government's "very limited" access to international debt markets and the weakness of the national economy.
    Morning commuters in Madrid said they were not surprised.
    "It is normal and understandable because in the situation we have been going through, this had to happen. I am surprised it didn't happen before," said Oscar Caro an accountant who lives in Madrid.
    "We are going to the floor. I think at the moment there is no solution for this situation. Let's hope it will be solved in the future but I think they are doing what ever they want without taking us into account. We are just numbers," said civil servant Carmen de la Cueva.
    Luis Martin, a lawyer working for the public sector, thinks that rating agencies have gone beyond their limits.
    "Apart from the fact that our country is in a bad situation, the power of those rating agencies is really shameful," he told Reuters.
    Although Moody's decision was announced late on Wednesday, most Spanish newspapers managed to have the news on their front pages.
    Rivals "El Mundo" and "El Pais" had the same headline: "Moody's downgrades Spain's debt almost to junk status"
    Madrid's stock market opened reflecting Moody's decision with Spain's premium risk reaching 540 points.
    Moody's said the rating is on review for possible further downgrades, which could come within the next three months.
    A spokeswoman for the agency said they would take into account Sunday's election in Greece and an upcoming European summit at the end of the month.
    Euro zone finance ministers agreed on Saturday to lend Spain up to 100 billion euros ($125.74 billion) to shore up its teetering banks, and Madrid said it would specify precisely how much it needs once independent audits are completed in just over a week.
    Standard & Poor's rates Spain two notches higher at BBB-plus with a negative outlook. Fitch Ratings cut Spain's rating by three notches on June 7 to BBB - one notch above Moody's - and put a negative outlook on the credit.
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