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Spain Next Year Financing Greater Demand
Author : Steven Guptha
Submitted : 2012-02-15 Word Count : 2 Popularity: Not Rated
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U.S. debt just to stir worries here, Moody's and immediately draw attention back to the European market, the debt crisis.
One of three major international rating agency Moody's said on Wednesday that the agency may cut the Spanish sovereign debt rating, it is expected that Spain will not need to do as Greece and Ireland to the EU requesting assistance.
The move intensified the crisis of European sovereign debt market from those with smaller economies, greater financial pressure gradually spread to the euro area member states greater economies of scale concerns. Affected by this news, the euro area peripheral countries bond yields continue to rise, the Spanish 10-year Treasury yields rose 9 basis points to 5.6%, Italy, Portugal, also the fate of similar bonds.
Spain, a large financing needs next year
Moody's on Wednesday for the start for Spain is the sovereign credit rating of Aa1-level assessment, and warned that 2011 may be cut Spain's sovereign credit rating. Moody's said the downgrade may be triggered due to "Spain 2011, has a high demand for refinancing, which are vulnerable to the financial pressure."
The emotional stress of the investors and banks can meet the Spanish government's financing needs early next year, lack of confidence in Spain's financing costs have recently soared to a record high since the establishment of the euro area points. Measure of risk premium, Spain 10-year Treasury yield spreads over German government bonds over the same period rising.
Moody's Vice President, chief analyst ratings of Spain Kathrin Muehlbronner said: "The huge capital demands of Spain - not only the country there are local government and banking, so that Spain is likely to face further financial pressure."
According to a statement released Wednesday, Moody's expects the Spanish Government needs to raise next year, nearly 1,700 million euros (227.48 billion U.S. dollars) of funds. In addition, the local government in 2011, still has nearly 300 billion euros in refinancing needs. "Moreover, the Spanish banking sector worth 90 billion euros next year need to refinance debt, and self-financing capacity of the banking industry but also on the part of the destiny of the Spanish sovereign debt." Moody's stressed.
Until September of this year, Moody's has three major international credit rating agencies is the last one down the Spanish sovereign debt rating was Aaa institutions. The warning means that Moody's is likely to cut again within the next three months the Spanish rating.
Less likely for help
Nevertheless, Spain's position in the euro area is still "better than some worse than."
Moody's said in a statement stressed that the agency continues to believe that the current sovereign credit rating of Spain's deep debt crisis than other euro zone countries even higher, from the Spanish sovereign credit rating significantly higher recently. Therefore, Moody's sovereign credit rating for the Spanish re-assessment, "most likely ruled Spain in the Aa rating will remain within the file."
Moody's expects will not need as Greece, Spain and Ireland, as to the EU requesting assistance. It said, "do not believe that Spain is facing the threat of insolvency", and the Government of Spain is expected to stabilize European financial institutions will not (EFSF) for liquidity support.
But that did not completely rule out the Spanish need to apply for EFSF assistance, but she also stressed that the Spanish Government is to achieve financial objectives in an orderly manner, and Spain to 6% next year, the fiscal deficit can have some confidence.
Spain is still struggling in pain after the bubble burst in the real estate market during the recession, about the prosperity of this decade, after the disillusionment of the country's public sector to turn profit into loss account. By the international financial crisis, the Spanish budget deficit in 2009 accounted for more than 10% of total GDP, and in May this year, the government announced stringent austerity plan, as at the end of September this year, the Spanish government deficit was 36.363 billion euros, gross domestic product ratio reduced to 3.45%.
Generally agreed that the current market, following Greece, Ireland, most likely after the euro-zone countries receiving external assistance in Portugal and Spain. From the market and the increasing pressure the EU, Spanish Prime Minister Jose Luis Rodriguez Zapatero has increased the intensity of deficit reduction. Spanish Finance Elena Salgado continued to reiterate that Spain will not be the next countries to apply EU aid, but the euro area member states should implement a common economic policy to defend the euro.
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