{"id":468825,"date":"2010-03-24T15:50:00","date_gmt":"2010-03-24T19:50:00","guid":{"rendered":"e2249889-c78b-43e3-9643-b1d7d4aa587b:412718"},"modified":"2010-03-24T15:50:00","modified_gmt":"2010-03-24T19:50:00","slug":"u-k-not-that-far-behind-portugal","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/468825","title":{"rendered":"U.K. not that far behind Portugal"},"content":{"rendered":"

\"\"<\/a>The one-notch downgrade<\/a> of Portugal\u2019s sovereign credit rating by Fitch to AA- may have come as little surprise to some. However, Britain is even more vulnerable to a downgrade given its AAA rating, according to Ian Beauchamp, global head of rates strategy with RBC Capital Markets. \u201cIt\u2019s not that far behind Portugal,\u201d he said from London on Wednesday.<\/p>\n

Standard & Poor\u2019s and Moody\u2019s Investors Service have both warned that the United Kingdom\u2019s public finance shortfall puts its top rating at risk. After finance minister Alistair Darling delivered his 2010 Budget<\/a> on Wednesday, S&P said it would reassess its U.K. rating after the general election expected on May 6.<\/p>\n

Fitch said its negative outlook on Portugal reflects concern about the potential impact of the global economic crisis on the country\u2019s economy and public finances over the medium term. The rating agency cited Portugal\u2019s existing structural weaknesses and high indebtedness across all sectors of the economy.<\/p>\n

\u201cA sizeable fiscal shock against a backdrop of relative macroeconomic and structural weaknesses has reduced Portugal\u2019s creditworthiness,\u201d said Douglas Renwick, Associate Director in Fitch\u2019s Sovereign team. \u201cAlthough Portugal has not been disproportionately affected by the global downturn, prospects for economic recovery are weaker than EU15 peers, which will put pressure on its public finances over the medium term.\u201d<\/p>\n

As for Greece, Mr. Beauchamp points out the relationship between credit default swap (CDS) levels and how countries score on RBC\u2019s Soverign Risk Heat Map. While Greece is flagged as having the most overall risk, he noted that CDS spreads suggest a huge amount of default risk is actually priced into the Greek market right now. As a result, those who consider a default by Greece unlikely, have been presented with a compelling investment opportunity.<\/p>\n

Spain\u2019s situation is a little bit more perplexing than its neighbours. Its economy has been extremely weak \u2013 the weakest in Europe – but its debt situation is only slightly worrying. Spain\u2019s banking system is supposedly quite strong as well.<\/p>\n

\u201cA lot of people think this is too good to be true,\u201d Mr. Beauchamp said, noting that the high level of negative market response suggests there may be a problem yet to be uncovered. As a result, he is keeping a close eye on Spain going forward. \u201cIt is purely an economic and market issue, rather than a debt problem.<\/p>\n

France may be embedded in the Eurozone, but you could argue that if it wasn\u2019t, the country would be in a bit of trouble, Mr. Beauchamp said. This is particularly true given its challenged position in terms of debt stock and flow, as well as debt servicing.<\/p>\n

\u201cIf it wasn\u2019t part of the Eurozone, it likely would be looking much more like the PIIGS than the core of Europe,\u201d he said. So when the rates strategist is asked if the Eurozone will ever break up, his answer is no. \u201cBecause France will never leave Germany.\u201d <\/a><\/p>\n

Jonathan Ratner<\/a> <\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

The one-notch downgrade of Portugal\u2019s sovereign credit rating by Fitch to AA- may have come as little surprise to some. However, Britain is even more vulnerable to a downgrade given its AAA rating, according to Ian Beauchamp, global head of rates strategy with RBC Capital Markets. \u201cIt\u2019s not that far behind Portugal,\u201d he said from […]<\/p>\n","protected":false},"author":4059,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-468825","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/468825","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/4059"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=468825"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/468825\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=468825"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=468825"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=468825"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}