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Wednesday, May 30, 2012
Former Spanish PM: 'WE'RE IN A SITUATION OF TOTAL EMERGENCY'
It really is all about Spain.
“We’re in a situation of total emergency, the worst crisis we have ever lived through” said ex-premier Felipe Gonzalez, the country’s elder statesman.
The warning came as the yields on Spanish 10-year bonds spiked to 6.7pc, pushing the “risk premium” over German Bunds to a post-euro high of 540 basis points. The IBEX index of stocks in Madrid fell 2.6pc, the lowest since the dotcom bust in 2003.
The buzz is that Greece is an afterthought and that the Euro either lives or dies based on the immediate response to Spain.
Matthew Lynne at MarketWatch argues that Spain will leave the Euro before Greece, a comment that sounds preposterous, but which is interesting as an emblem of the way people are talking about Spain.
Matthew Yglesias at Slate has the same take, although a bit more sober. "Greece is a distraction," he says.
The point anyway isn't so much that Spain is in a state of crisis, but that it's in a state of crisis that will demand some kind of rapid response.
Let's see if Europe is up for it.
Moody’s Downgrades Danske Bank, Eight Other Danish Lenders
Moody’s Investors Service downgraded the ratings of nine Danish financial institutions, including the country’s biggest bank, Danske Bank A/S, saying loan books have deteriorated and debt refinancing has become harder.
Danish banks suffer from “a weak operating environment, pressurized asset quality and poor profitability,” the rating company said late yesterday in a statement published out of London.
Danske Bank’s deposit rating was cut two steps to Baa1 from A2, after Standard & Poor’s earlier yesterday cut the Copenhagen-based bank’s long-term rating to A- from A. The bank said in a separate statement that it “does not understand Moody’s very negative view” of the Danish banking industry. It had also questioned the reasoning for S&P’s downgrade.
“We have had a close dialog with Moody’s in recent months,” Henrik Ramlau-Hansen, Danske’s chief financial officer, said. “We are certain that Moody’s has heard our arguments, but we do not think they are reflected in the rating the bank has received.”
Denmark’s bank industry is still struggling to emerge from the fallout of its 2010 bail-in package, Europe’s only resolution framework that requires senior creditors to share losses. A burst real estate bubble helped put the economy into a recession last year and sent loan losses surging among many of its regional lenders as agricultural loans soured.
Other Danish banks cut by Moody’s yesterday by two steps included Jyske Bank A/S and Sydbank A/S (SYDB) while Spar Nord Bank A/S (SPNO) and Ringkjoebing Landbobank A/S (RILBA) were cut by one level.
Moody’s also lowered the rating of mortgage lender Nykredit Realkredit A/S and its Nykredit Bank A/S unit, both by three notches.
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