Business

Spanish Bombs: Moody Downgrades 28 Spanish Banks

(The Blaze/AP) — Moody’s Investor Service is cutting its credit ratings on 28 Spanish banks, saying the weakening financial condition of Spain’s government is making it more difficult for that country to support its lenders.

Moody‘s also said the banks are vulnerable to losses from Spain’s busted real estate bubble.

The announcement from Moody‘s came on the same day that Spain’s government formally asked for help from its European neighbors in cleaning up its stricken banking sector. However the request left many questions unanswered, including how much of a $125 billion loan package Spain would ask for.

Spanish Bombs: Moody Downgrades 28 Spanish BanksThat uncertainty led to losses Monday in stock markets in the Europe and the U.S. Bond investors pushed Spain’s borrowing costs higher, a signs of lagging confidence in the country’s ability to support its banks.

The downgrades are a measure of Moody’s view on the ability of the 28 banks to repay their debts. Moody‘s said the downgrades stemmed from its lowering of Spain’s credit rating by three notches earlier this month.

A downgrade usually means that banks will have to pay more for their debt. Investors demand higher interest for riskier debt, which is what the downgrades represent. However, with interest rates already at rock-bottom levels, the lower ratings may not significantly affect the cost of funding for the banks.

Spain formally asked the European Union on Monday for rescue loans to help clean up its troubled banking industry. The Spanish economy, the fourth-largest of the 17 countries that use the euro currency, is suffering from the aftershocks of a real estate bust that has devastated the county’s economy. Unemployment is nearly 25 percent.

The financial strength of Spain‘s government hinges on that of the country’s banks, as both government and banks struggle for survival. Two-thirds of Spain’s government bonds are owned by Spanish banks, pension funds and insurance companies.

Moody’s said in a statement that the agency was encouraged by the broad measures being introduced by Spain to support its banks.

Spanish Bombs: Moody Downgrades 28 Spanish BanksThe conservative government of prime minister Mariano Rajoy did everything it could to avoid use of the word “bailout.” (Photograph: Fred Dufour/AFP)

Moody‘s move came four days after the rating agency downgraded some of the world’s biggest banks, including Bank of America, JPMorgan Chase and Goldman Sachs, reflecting concern over their exposure to the violent swings in global financial markets. Moody’s also cut the ratings on seven German and three Austrian banks this month.

(Related: Wrecking Ball: Moody’s Downgrades 15 Major Banks)

The series of downgrades weren’t a surprise. But they come at a time of great uncertainty in the global economy. Europe’s 17-nation currency union is under threat, the U.S. economy is slowing and the economies of India, Brazil and China are cooling.

The Associated Press contributed to this report.

Comments (28)

  • midnightgolfer
    Posted on June 26, 2012 at 3:41am

    Spain’s government is currently centrist, not conservative.

    Report Post »  
  • lukerw
    Posted on June 25, 2012 at 11:57pm

    All the EU BailOuts… are alike a Policy of Fire Containment… where they drench the outside of the burning structure to prevent the Spread of Fire… but this building is still burning… and then their is another. THIS IS NOT A FIX!

    Report Post » lukerw  
  • USA-Ron
    Posted on June 25, 2012 at 11:48pm

    Forget about Spanish Banks,

    Let us Americans think about USA Banks, OK ?

    Report Post »  
    • midnightgolfer
      Posted on June 26, 2012 at 3:47am

      Good idea, except, American banks, and American government policies are repeating all the same mistakes that have led to the situations in Greece and Spain, et al. Will the USA learn from Europe’s mistakes? That is the question.

      Report Post »  
  • RealJesusWitness
    Posted on June 25, 2012 at 11:19pm

    I am witness of Jesus Christ.Jesus showed me he is god almighty.I am not lying take this very serious.Here is what is going to happen soon.After USA is done with syria and its next target will be north korea.Vladimir Putin will be sick of the USA attacking whom they please and he will nuke the USA.I saw this in a dream and being a witness of Jesus and knowing there is no greater witness than me on this earth u should listen.We r in the last decade.All hell will break loose soon.Here r some of the words Jesus who is god spoke to me so u can see he is with me.”I am with u ,I will never leave u ,I am always with u,where ever u go i walk with u”.Jesus is all in white,has a voice unlike anyone has ever heard,in his presence u cannot feel from your knees down u think u r floating,he is the one from the beginning as he showed me,all your stress,pain,worries,sadness,cursing r wiped from within u and u never knew these things existed,love and peace of god will leave u mind boggled,in jesus is the purest good that exists,u can barely stand in his presence the power is INSANELY MIND BOGGLING.I have said enough the witness of christ is here and this is my first and last post on the blaze.PRAY,REPENT,LOVE ONE ANOTHER,all politicians r cursed.LOrd is coming,keep his commandments.HONOR YOUR PARENTS.

    Report Post »  
    • SocialistSlayer
      Posted on June 26, 2012 at 4:20pm

      Dude – Calm down – head to the medicine cabinet and take your medications. You are ranting like a lunatic!

      Report Post » SocialistSlayer  
  • djp70124
    Posted on June 25, 2012 at 11:07pm

    Let me get this right, Socialists are asking Capitialist for aid and then they say “Be like us”. Are they high? The Pres. says the same thing. Don’t spend money we do not have!

    Report Post »  
    • midnightgolfer
      Posted on June 26, 2012 at 3:50am

      Actually, the Spanish people finally rejected the Socialist party, and have installed a new, centrist party, that is trying to repair the damage that 8 years of socialism and “green” governance has down to their economy and society.
      Sadly, this means the new government has chosen to temporarily make some things worse, so they can get better, and other things, like raising taxes to try to decrease deficits, and borrowing money from emergency EU funds, they are doing the same as the socialists did.

      Report Post »  
  • soybomb315
    Posted on June 25, 2012 at 10:32pm

    I have yet to hear Romney say what he will do when Europe is on fire

    Report Post » soybomb315  
    • Wolfgang the Gray
      Posted on June 25, 2012 at 10:45pm

      I‘m guessing he’ll thank The Lord that there is an ocean between us and Europe. Other than that, I don’t think he is willing to do what is needed to stop the US from racing off over the cliff. R or D in Nov, we’re headed for very rough times. At least with the R though, we won’t have to try to stop the socialist takeover.

      Report Post » Wolfgang the Gray  
    • soybomb315
      Posted on June 25, 2012 at 11:05pm

      right

      but this isnt 1800. the presence of the ocean is meaningless. The same people and forces that control europe are present here

      Report Post » soybomb315  
  • Charles
    Posted on June 25, 2012 at 9:45pm

    Back when spain readily capitulated to the islamic terrorists shortly after a train bombing I wrote them off as a country of weakling losers.

    Report Post »  
    • rickc34
      Posted on June 25, 2012 at 9:53pm

      Yup. Cowards turned their back on the U.S. then now let them rot.

      Report Post »  
  • Cymry
    Posted on June 25, 2012 at 9:39pm

    The world situation is easy to see if you have the vision to see it.

    The return of Jesus is soon.

    I read the news stories and it‘s sometimes difficult to differentiate between it being a story about a biblical prophecy or if it’s a story about a current event…….it’s both, they align.

    Ezekiel 7:19
    They shall cast their silver in the streets, and their gold shall be removed: their silver and their gold shall not be able to deliver them in the day of the wrath of the LORD: they shall not satisfy their souls, neither fill their bowels: because it is the stumblingblock of their iniquity.

    Revelation 1-13

    Report Post » Cymry  
  • HorseCrazy
    Posted on June 25, 2012 at 9:04pm

    I have relatives that work in banking over there, the entire feel of the country is currently tense and unpleasant. I always feel for the regular people, like we the people here, who are at the mercy of the elite who got us into these messes in the first place. Oh the house of cards that has been built. Mutually assured destruction as Beck would say.

    Report Post »  
  • MeteoricLimbo
    Posted on June 25, 2012 at 8:50pm

    The rain in Spain falls mainly on their brains.

    Report Post » MeteoricLimbo  
    • midnightgolfer
      Posted on June 26, 2012 at 4:00am

      The “Green Energy” policies of the previous, socialist government in Spain have cost their economy over 100 Billion, and more than doubled their unemployment. The president of the United States of America, and Agenda 21, which his actions demonstrate he upholds, is following those exact same policies, by a factor of ten, despite the example Spain has set that it is a recipe for failure.
      Spain has made it plain to see that ‘watermelon’ economics are a bullet train towards misery, and yet do you see. The American public looks now, but will they show that they can see in November?

      Spain went to borrow money today, got downgraded, so that paying that money back will be even more impossible, simply because they actually need it now.

      Where will the rain fall when the USA needs to borrow, and gets downgraded. Will the EU bail them out, then? China? Alpha Centauri?

      Report Post »  
  • Thatsitivehadenough
    Posted on June 25, 2012 at 8:23pm

    And somehow, I just sense that Soros will make a bundle on it.

    Report Post » Thatsitivehadenough  
    • lukerw
      Posted on June 25, 2012 at 8:38pm

      Either… Short Stocks… or Invest in Commodities (Food & Land)… and place Reserves in Gold!

      Report Post » lukerw  
  • barber2
    Posted on June 25, 2012 at 8:22pm

    Get ready. That is the Obama Plan for America ! He hates banks. Goes back to the “ Affordable Housing Act ” – which was NOT affordable . It should have been called the “ Disastrous Housing Economic Bomb ” …but you know how those Democrats Lie ! Latest one is the Affordable Health Care Act….just another bomb waiting to be lobbed at America…

    Report Post »  
    • Mutiny
      Posted on June 25, 2012 at 8:40pm

      You are so right. Obama did all of this. He created the Euro. He created our global police force. He caused 911. We had zero debt when he took office and now look. We had record surpluses when he took office and now look.

      All Obama has done is making things worse. That is what government intervention does. I dont want government intervention from the left or the right. They both suck and are sending us to bankruptcy and ultimately in to the hands of a global government.

      Yes yes, “Romney isnt great but he isnt a commie”. I will not vote for the lesser of two evils. You can say that a vote for Ron Paul or 3rd party is a vote for Obama( it isnt, but Ok). I dont care. We warned you people during the primaries. Get with us, because we arent budging. Well time is drawing near. I see this election in November has who ever wins between the two we all lose. The one thing I will do though is sleep well at night knowing I didnt cower in fear from the guy who the right is blaming everything. Remember when the left blamed Bush for everything. Well you ass clowns sound just the same.

      Report Post » Mutiny  
    • Fubared
      Posted on June 25, 2012 at 8:53pm

      Mutanty
      Is this another RP tirade? Math with the libs and Paulbots seem to be out of fashion. We have out and out marxism on one side, and Romney on the other. Cool, align with socialism and sleep the sleep of your pot headed pals. In VA, we only had 2 options because the others chose not to get on the ballots. I voted RP last fall, for the primaries. Since then, his supporters have cause a 180 in my thinking-and his nonexistant foreign policy helped. Piss off, align with socialists and right that in your noggin, and good day.

      Report Post »  
    • HorseCrazy
      Posted on June 25, 2012 at 9:09pm

      he has taken over the lending industry via the back door and no one realizes it. The last 39 homes I sold this year my buyers were approved with conventional financing through mortgage brokers only to be offered a better deal through USDA, yes the same USDA that brings us the food pyramid. While this is not a new program, the deal being offered are more competetive than the banks would give.

      Report Post »  
  • give me a break
    Posted on June 25, 2012 at 8:16pm

    look out this is going to be a mass crash on the s+p buy copper or silver or gold its low now

    Report Post »  
    • chips1
      Posted on June 25, 2012 at 8:48pm

      All of this is way over my head, however, the other day a poster said that the world is going to render the U.S. dollar worthless. It had something to do with Iran, China, and Russia. Didn’t sound good to me.

      Report Post »  
  • lukerw
    Posted on June 25, 2012 at 8:15pm

    They needed 400 Billion… and received a BailOut of 100 Billion — No Surprise!

    Report Post » lukerw  
  • KangarooJack
    Posted on June 25, 2012 at 8:14pm

    Rest assured, It‘s Bush’s fault.

    Report Post » KangarooJack  

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