Sat, May 19, 2012 - Page 1 News List

Moody’s slashes 16 Spanish banks’ ratings


Concerns over Europe’s debt crisis deepened as the ratings of 16 Spanish banks were cut after the country slipped into recession, while Greece was also downgraded on fears it could exit the eurozone.

Asian markets tumbled yesterday and the euro faced more pressure as traders shifted out of riskier assets on expectations that another Greek election next month would be won by anti-austerity parties.

Tokyo tumbled 2.99 percent, or 265.28 points, to 8,611.31, while Seoul plummeted 3.4 percent, or 62.78 points, to 1,782.46 and Sydney dived 2.67 percent, or 110.9 points, to 4,046.5, its biggest fall in eight months.

Europe’s main stock markets sank in opening deals yesterday. London’s benchmark FTSE 100 index dropped 0.92 percent to 5,289.37 points, Frankfurt’s DAX 30 lost 0.86 percent to 6,254.82 points and in Paris, the CAC 40 shed 1.03 percent to 2,980.86.

Madrid’s IBEX-35 index of top shares tumbled 2.28 percent to 6,388.8, with banking stocks falling moderately after the downgrade.

On currency markets, the euro stood at ¥100.33 in Tokyo in afternoon trade, the unit’s weakest level since early February, and slightly lower than ¥100.65 in New York. It was above the ¥102 level on Thursday.

The single currency also lost ground against the US dollar, slipping to US$1.2657 from US$1.2693 in New York.

A caretaker government took office in Athens on Thursday to organize its second election in six weeks after an inconclusive May 6 vote.

Fitch Ratings downgraded Greece’s credit a notch, to “CCC” from “B-,” saying it was vulnerable to default amid political uncertainty over Athens’ commitment to the crucial bailout plan.

The IMF said on Thursday it would hold off on official contacts with Greece until after the June 17 elections, warning no new funds would be released from the 240 billion euro (US$305 billion) bailout if progress on pledged reforms and tough austerity measures faltered.

In Spain, Moody’s slashed the ratings of 16 banks by between one and three notches, citing “renewed recession, the ongoing real-estate crisis and persistent high levels of unemployment.”

It also blamed the reduced creditworthiness of the government.

The move came just over a week after the government intervened to prop up the fourth-largest bank Bankia by taking a 45 percent stake.

The Spanish government paid higher rates to place three and four-year bonds with wary investors on Thursday, while Bankia was reportedly hit by heavy withdrawals by clients.

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