The ongoing recession has metal producer like Teck Resources (NYSE:TCK), BHP Billiton (NYSE:BHP) and Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) down today, as the dollar strengthened, lowering the appeal of commodities.
Concerns over the continuing sovereign debt crisis in Europe is the major impetus behind this, as the focus goes back on the EU after being given a free ride in the press for some time.
Confirming what we and others commented on concerning the pathetic "stress tests" which made it appear the sovereign debt holdings were in better shape than they actually were for European banks, now they are again under pressure as the real story of their condition has yet to accurately be told, and we can almost be certain they'll be far weaker than thought.
Yield spreads for Germany and Greece were at their widest levels since May, and the gap between yields on 10-year German bonds and Portuguese and Irish debt are at the highest levels in history.
German bankers said Monday the ten largest lenders in the country may have to raise an additional $134 billion in new capital, underscoring their weakness.
Copper prices dropped on the news as demand issues were raised in light of the revelation things aren't as good as they were asserted in Europe.
Showing posts with label Irish Bonds. Show all posts
Showing posts with label Irish Bonds. Show all posts
Tuesday, September 7, 2010
Wednesday, August 25, 2010
Ireland Bonds Downgraded by Standard & Poor's
It was only a matter of time before the extraordinary risk inherent in the European Union was brought to the forefront of economic news, and it happened on Tuesday when Standard & Poor's downgraded Ireland's bond ratings, following up on the same downgrade on Irish bonds made by Moody's (NYSE:MCO) in July.
Reasons given for the downgrade were the enormous costs associated with supporting the financial system of the country.
Irish bonds were slashed one level to "AA-" from "AA." A negative outlook was also assigned. The short-term rating was maintained at "A1+."
S&P said the increasing costs will "further weaken the government's fiscal flexibility over the medium term."
The rating agency added that the overall debt of the Irish government will increase by 2012 to an enormous 113 percent of the gross domestic product of Ireland. They said that is over one-and-a-half times over the average for the other European Union countries.
It even surpasses Spain and Belgium by a significant amount, said S&P.
Depending on how the government of Ireland performs fiscally, the rating could be lowered again, especially if the time-frame is extended, of in the case of their deficit being reduced quicker, it could result in an upgrade.
More than likely we'll see things get worse for the Emerald Isle before they get better. That means there will probably be more downgrades in the future, and they won't be the only country experiencing that unwanted distinction.
Reasons given for the downgrade were the enormous costs associated with supporting the financial system of the country.
Irish bonds were slashed one level to "AA-" from "AA." A negative outlook was also assigned. The short-term rating was maintained at "A1+."
S&P said the increasing costs will "further weaken the government's fiscal flexibility over the medium term."
The rating agency added that the overall debt of the Irish government will increase by 2012 to an enormous 113 percent of the gross domestic product of Ireland. They said that is over one-and-a-half times over the average for the other European Union countries.
It even surpasses Spain and Belgium by a significant amount, said S&P.
Depending on how the government of Ireland performs fiscally, the rating could be lowered again, especially if the time-frame is extended, of in the case of their deficit being reduced quicker, it could result in an upgrade.
More than likely we'll see things get worse for the Emerald Isle before they get better. That means there will probably be more downgrades in the future, and they won't be the only country experiencing that unwanted distinction.
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