Rating agencies Fitch and Moody’s threaten to collectively downgrade the Euro Zone, should Greece exit the common currency club. I wonder: did Greeks get supporters against Germany’s pressures? Is it a good or a bad sign? But, of course, the question about the power potential of ratings agencies remain…
Moody’s: Greek euro exit could threaten currency’s existence
Moodys Investors Service said on Friday that a Greek exit from the euro could pose a threat to the currencys existence. In addition, developments in Spains banking sector that may require a European rescue package have negative credit-rating implications for the sovereign, Moodys said in a statement.
‘Were Greece to leave the euro, posing a threat to the euros continued existence, we would need to review all euro-area sovereign ratings, including those of the Aaa nations,’ the rating agency said.
A Greek euro-zone exit would particularly affect the sovereign ratings of Cyprus, Portugal, Ireland, Italy and Spain, Moodys said.
‘Some (other) members of the European Union could also be affected, given the strong financial and trade linkages that exist between the members of the monetary union and the European Union,’ Yves Lemay, a Moodys sovereign credit analyst in London, told Reuters.
Moody’s warning followed a similar warning by Fitch on Thursday. Fitch warned to downgrade EZ credit ratings. On Friday, Fitch cut Spain’s long-term credit rating to BBB and left it two notches from junk.
Fitch “also said it would immediately cut the credit ratings on Cyprus, Ireland, Italy, Spain and Portugal if Greece were to exit the eurozone. Additionally, all eurozone nations would have their ratings put on its negative ratings watch list, setting a six-month time frame for a potential downgrade. (Financial Post)
A Euro Zone Finance Ministers teleconference is scheduled for today Saturday at 5 pm, with Spanish rescue package on the agenda. Spanish banks are on the verge of collapse due to property bubble. It is estimated the banks would immediately need 40 billion euro, while the total rescue package is estimated to be 80 billion euro.
Eurogroup Head Juncker, Spanish de Guindos (13 Mar 2012).
Add some billions for golden boys bonuses and there would go a €100-billion package that will enslave Spaniards, their children and their children’s children….