Posts Tagged ‘fitch credit rating’

Japan Downgraded By Fitch

May 23rd, 2012 Comments off

Fitch, one of the 3 major credit ratings agencies, has lowered its rating of Japanese sovereign debt to A-plus, with a negative outlook. Japan’s gross sovereign debt is nearly 240 percent of its GDP. This is the highest correlation of public debt to GDP of any major advanced economy.

There are some factors mitigating the massive Japanese government debt bubble. It is a nation of savers, which provided the sovereign with a domestic pool of cheap credit. Japan has large foreign currency reserves, and significant  overseas assts (including hundreds of billions of dollars of U.S. Treasuries). However, the demographic trend in Japan is ominous in terms of future sources of cheap credit. The two decade  old “L” shape recession, fiscal and political stagnation, and the triple disasters last year involving the earthquake, tsunami and nuclear meltdown further increased already massive deficit spending by Tokyo.  One must conclude, therefore, that Fitch was not being overly pessimistic in describing Japan’s future fiscal outlook as being negative.



Fitch Ratings Agency On Supposed Greek Debt Bailout Deal: BS

February 23rd, 2012 Comments off


There is the old story about the boy who cried wolf too often. Similarly, the Eurozone clique of inept politicians continues to parade out “final” Greek bailout deals. The most recent one is a virtual carbon copy of one submitted months ago. It seems to no longer matter. Even the ratings agencies, far more of a lagging than a leading indicator, now understand that all the talk in Brussels of a real solution  to the Greek debt crisis that also ring fences the other vulnerable Eurozone economies is just fantasy.

Proof this is the decision by Fitch in response to the latest Greek debt crisis plan. It cut its rating on Greek Sovereign debt further, from CCC to C, well inside the territory of junk bonds. Fitch added the following commentary: a default by Athens on its sovereign debt “is highly likely in the near term.”




Fitch Ratings Agency Downgrades Eurozone Countries

January 31st, 2012 Comments off

Following in the wake of a string of downgrades of the Eurozone, including S & P cuttings its rating on France, Fitch has joined in with its own updated list of woes. Italy, Spain, Belgium, Slovenia and Cyprus have had their sovereign debt ratings cut by Fitch, just before the most recent Eurozone emergency leaders summit on the sovereign debt crisis. It seems surreal that the most recent emergency meeting is on the topic of “economic growth,” just as more quarterly results show  negative growth from various Eurozone members.

It is unlikely that the increased rhetoric emanating form the mouths of European politicians that their monetary bloc is just on the cusp of a new wave of economic growth will impress the ratings agencies. The question then is this; who will investors trust? Will it be the ratings agencies, which are falling all over each other in their ratings cuts and negative outlook with respect to the Eurozone, or will they place their bets on European politicians, who so far are batting a big fat zero in all their multitude of prognostications on the trajectory of the global economic crisis? I suspect the answer will not surprise many.



Spain’s Credit Rating Lowered By Fitch

October 7th, 2011 Comments off

More developments on the Eurozone sovereign debt credit ratings front. Fitch, one of the big three credit ratings agencies, lowered its rating on Spanish government debt by two notches, from AA plus to AA minus. As recently as 2010, Fitch rating Madrid’s debt at AAA.  This credit rating cut follows on the heels of the decision by Moody’s to drop Italy’s credit rating two levels.

With the sovereign debt crisis in Europe cascading out of control, and a severe Eurozone banking crisis now developing, one has to be obtuse to believe that the global financial and economic crisis that began in 2008 has been “resolved.” Sovereign credit ratings are dropping with monotonous regularity, and a growing cadre of economists are suggesting that the Eurozone, U.K. and U.S. are already in the midst of a double-dip recession.

With negative economic growth and growing public debt to GDP ratios, how are these  nations going to resolve their sovereign debt crisis?