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NEW YORK/MADRID - Spain s credit rating was slashed by threenotches on Thursday by Fitch, which signalled it could make furthercuts as the cost of restructuring the country s troubled bankingsystem spiralled and Greece s crisis deepened. Fitch cut its rating on Spain s government debt by three notchesto BBB and placed the country on negative outlook, meaning afurther downgrade could come in coming months. The new rating was Spain s lowest among the three main ratingsagencies, and leaves it just two short of junk status, which wouldforce many institutional investors to automatically dump Spanishassets. The negative outlook primarily reflects the risks associated witha further worsening of the euro zone crisis, notably contagion fromthe ongoing Greek crisis, the agency said in a releaseaccompanying the downgrade. Fitch said the rating downgrade reflected higher than expectedrecapitalisation needs for Spanish banks, which it said would bearound 60 billion euros ($75 billion), or as high as 100 billioneuros under a more severe stress scenario. The country s rating also assumed the country would receiveEuropean help in recapitalising its banking system. Fitch saidrecapitalisation costs would push the country s debt to grossdomestic product ratio up by 6 percentage points more thanexpected, and the ratio would peak at 95 percent in 2015. Fitch acted without waiting for a widely expected EU rescue.Chancellor Angela Merkel said Europe was ready to act to ensurestability in the euro zone. Spanish Prime Minister Mariano Rajoy said he would wait for theresults of independent audits of the banking system before talkingwith Europe about how to recapitalise troubled lenders. An International Monetary Fund report due out next Monday isexpected to show Spanish banks need at least $50 billion, financialsector sources said. One analyst largely shrugged off the credit downgrade. Spain is obviously the largest part of the conversation right nowbut for their credit rating to be downgraded to triple-B is verymuch in line with expectations. The larger news will be if Germanyis successful in finding a way to get money into Spanish banks, said Art Hogan, managing director of Lazard Capital Markets in NewYork. The agency said the country s rating would remain under pressureas the country would remain in recession this year and next.Previously it had forecast a mild recovery in 2013. According to Fitch, Spain also remained especially vulnerable tocontagion from the ongoing crisis in Greece, which was reducing itsfinancing flexibility. I am an expert from african-lacefabrics.com, while we provides the quality product, such as African Net Lace Fabrics Manufacturer , Embroidered Net Lace, African Embroidery Lace Fabric,and more.
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