Spain Will Tap Aid from ECB

The disingenuous and dishonest assertions by some in the Spanish government that they are thinking about not taking the bailout money from the ECB are ridiculous, as there is no doubt, regardless of the posturing of Spain, that they will keep on going as they are without aid, or take the route of getting a line of credit. Both ideas are ludicrous, and won't fly under the growing pressure from the eurozone for Spain to access the capital.

According to the Spanish government, the company is in the midst of contemplating on the economic direction it wants to go, but this is only for its population, which will resist the expected austerity measures that accompany access to ECB aid.

The idea that Spain will continue to borrow at the high rates it currently is in the bond markets doesn't pass the smell test, and the European Central Bank will surely be given permission to buy bonds in order to lower the borrowing rates of the country.

Those watching the situation don't believe Spain even has several weeks to wait, and its politicians are probably trying to wait until after the elections on this Sunday before caving and tapping into the aid.

Germany, as usual, has also attempted to position itself as against Spain being bailed out, asserting it has no need of one. Angela Merkel will attempt to make it look like she opposes it as well, but like in her past actions, will try to make it look like she valiantly fought against it, right up to the time she gives the go ahead for more bailouts to continue. Again, all of that is so the German people are made to believe she's battling on their behalf, while all the time already knowing and deciding that the bailout will happen for those countries in the eurozone that ask for it.

Investors and those affected by the decisions in the eurozone need to know that the game is completely rigged, and Draghi was telling the truth when he said he's committed to doing whatever it takes to save the euro and the eurozone. There is no question the majority of leaders in the EU agree with him, and support whatever it takes to get it done.

Standard & Poor's downgraded the credit rating of five major Spanish regions Wednesday, including Canary Islands, Andalucia, Aragon, Galicia and Madrid. That puts even more pressure on the country to take aid before investors start to sell of Spanish bonds.

Overall Spanish debt was recently lowered by Standard & Poor's to BBB-, only one step above investment grade ratings. Below that is junk status, which would make it much more expensive for the Spanish government to borrow capital. Bond investors, as mentioned, would flee from their bond holdings if that were to happen, which is a likely probability.

For now, Moody's (MCO) is also keeping its lowest rating on Spanish credit without cutting it down to junk status. It has a Baa3 rating on Spain.

Taking all that into consideration, there is no doubt Spain will get aid from the ECB. The market is simply waiting for that to happen, and when it does, gold and silver prices will get a nice bump.

Euro, Australian Dollar Up on U.S. Mfg Data

The euro and Australian dollar moved up early Tuesday on news that manufacturing in the U.S. expanded in September; the first move in positive territory since May.

In response, the U.S. dollar dropped while commodities in general responded by climbing. The euro got a reprieve from three-week lows,

As for factories in the euro zone, they ended the worst quarterly performance since the early part of 2009. China also continues to slow down, although that hasn't been as much of a surprise because of the announcement by Chinese leaders some time ago that they were going to attempt to cool off their fast-growing economy.

The Australian dollar jumped to $1.0366, while the euro climbed to $1.2895, after falling as low as $1.28035 in Monday trading.

Questions concerning the euro remain as uncertainty as to when Spain will officially seek a bailout, and also the possibility of its credit rating being downgraded to junk status by Moody's (MCO).

Societe Generale said concerning Spain, "The Spanish government probably thinks it needs to find a way of presenting the request for assistance as a victory of sorts, just like it did for the bank deal, to its electorate."

Spain has positioned itself to access aid by releasing a budget that has significant cuts for 2013. That also included a series of economic reforms after it banks went through stress tests in preparation of aid.

Moody’s (MCO) (TRH) (CVH) (PLXS) (KONA) (ARMH) Get Ratings Changes

Moody’s (NYSE:MCO), Transatlantic Holdings (NYSE:TRH), Coventry Health Care (NYSE:CVH), Plexus (NASDAQ:PLXS), Kona Grill (NASDAQ:KONA) and ARM Holdings (NASDAQ:ARMH) get ratings adjustments from analysts.

Feltl & Co. upgraded Kona Grill (KONA) from a "Buy" rating to a "Strong Buy" rating. They have a price target of $8 on the company.

The Benchmark Company upgraded ARM Holdings (ARMH) from a "Hold" rating to a "Buy" rating. They have a price target of $35 on the company.

Wedbush downgraded Coventry Health Care (CVH) from a "Neutral" rating to an "Underperform" rating. They lowered their price target from $38 to $32.

The Benchmark Company downgraded Moody’s (MCO) from a "Buy" rating to a "Hold" rating. They have a price target of $29 on the company.

Ticonderoga downgraded Plexus (PLXS) from a "Neutral" rating to a "Sell" rating. They have a price target of $20 on the company.

Deutsche Bank (NYSE:DB) downgraded Transatlantic Holdings (TRH) from a "Buy" rating to a "Hold" rating.

Moody's (NYSE:MCO) Raises China's Credit Rating, Citing Strong Economy

Saying the economy of China and their sound balance of payments has helped them perform strongly, Moody's (NYSE:MCO) upgraded their rating on the country today from A1 to Aa3.

Moody's senior vice president Tom Byrne said, "The record of the past year demonstrates that China's policy response to the 2008 crisis has been effective. Real GDP growth initially rebounded rapidly in response to the stimulus measures, and is moderating to a more sustainable rate of growth, which seems likely to be around 9%-10% this year, and perhaps 8%-9% in 2011."

It's interesting to see Moody's, which is based in the United States, upgrade China almost immediately after China's Dagong rating agency lowered the U.S. credit rating from AA to A+ after the Federal Reserve announced they're going to implement another round of quantitative easing which Dagong said would reduce the ability of the U.S. to repay their debt.

Moody's (NYSE:MCO) Downgrades EXCO Resources (NYSE:XCO), As Do Several Others

Moody's (NYSE:MCO) downgraded EXCO Resources (NYSE:XCO) from "Positive" to "Developing" on the proposed buyout of the company and taking it private being a distraction to management.

Other agencies joined the downgrade bonanza, with Morgan Keegan downgrading them from "Outperform" to "Market Perform," MBO Capital downgraded them from "Outperform" to "Market Perform" as well, and Scotia Capital also downgraded XCO from "Sector Outperform" to "Sector Perform."

Price targets stood at $20 from Morgan, increased from $17 to $21 by BMO, and from $20 to $20.50 by Scotia.

Standard & Poor's Rating Service put the "BB-" corporate credit rating and "B" senior unsecured debt rating on negative credit watch.

Ratings could be lowered depending on the success of the takeover and how the financing is structured, concluded Standard & Poor's.

Moody's sees the process itself as being detrimental to the company, no matter what the ultimate terms of the deal may end up being.

POSCO (NYSE:PKX) Selling $700 Million of Global Bonds

South Korean steel giant POSCO (NYSE:PKX) announced it'll be selling close to $700 million in global bonds in October, according to company President Choi Jong Taehired.

POSCO has a rating of A at Standard & Poor’s and A- at Fitch Ratings, and A2 at Moody’s Investors Service (NYSE:MCO).

Similar to the region is resides in and ongoing geopolitical concerns, POSCO has had a rocky ride over the last year, moving up and down in wide swings, although it seems to have recovered nicely from May lows, and has been consistently moving upward in share price.

On October 1 of 2009, they stood at $100 a share even.

Friday they closed at $116.63, gaining $2.65, or 2.32 percent. They have a market cap of just under $36 billion.

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.

Moody’s (NYSE:MCO) Downgrades Anadarko (NYSE:APC) Debt

Moody’s (NYSE:MCO) downgraded the debt of Anadarko (NYSE:APC) Friday, based on concerns over their liability as 25 percent owner of the well, and what is going to happen once the attention shifts to other parties connected to the disaster.

The long-term debt of the company, along with its guaranteed subsidiaries was dropped from Baa3 to Ba1. The long-term ratings will remain under review by Moody's, which means there could be further downgrades in the future.

Also downgraded was the Corporate Family Rating of the oil giant, dropping to Ba1.

“The action taken today by Moody’s is very disappointing and surprising in light of Anadarko’s limited role as a non-operating investor in the Macondo well. Although we understand the concern over uncertainty surrounding the current situation, we believe it is too early in the process for Moody’s to take this action. Further, our significant concerns about the behavior and actions of BP as operator of Macondo were highlighted by our Chairman and CEO in a statement issued earlier today,” said Anadarko Sr. Vice President, Finance and CFO Robert Gwin. “We believe our liquidity position, asset portfolio, and continued strong operating and financial performance provide us with the flexibility to take action based on the facts as they develop. We will take whatever steps are appropriate to protect our stakeholders and will work diligently to regain our investment grade status with Moody’s.”

Anadarko Chairman and Chief Executive Officer Jim Hackett said in a statment Friday that "The mounting evidence clearly demonstrates that this tragedy was preventable and the direct result of BP's reckless decisions and actions."

This seems to indicate growing concern Anadarko could be held to some significant liability, and the communication by Hackett was one attempt to lower that idea in the minds of those who will make those decisions.

BP has also said they expect "contributions" from their partners concerning claims coming in against them, and that could also be part of Hackett blasting the company.

The action by Moody's implies they don't think Anadarko is not going to get away with not paying something significant as a result of the oil spill.

Moody's (NYSE:MCO) Slashes BP (NYSE:BP) Debt Ratings

Moody's (NYSE:MCO) follows other ratings agencies in downgrading the debt of BP (NYSE:BP), cutting several of its credit ratings today.

The long-term debt rating of BP was cut from A2 to Aa2, their BP North America unsecured issuer rating dropped from Aa3 to Baa1, and for their BP Finance PLC unit, their senior unsecured issuer rating was slashed from Aa3 to A3.

Fitch Ratings and Standard & Poors recently downgraded the debt of BP as well.

The reasons for the cuts were solely on the uncertainty related to the Deepwater Horizon explosion which released the oil into the Gulf of Mexico.

BP's American Depository Receipts or ADR has fallen by 47.7 percent since the accident on April 20.

Moody's (NYSE:MCO) Slashes Transocean's (NYSE:RIG) Ratings Outlook

Transocean (NYSE:RIG) had its ratings outlook lowered by Moody's (NYSE:MCO) from "Stable" to "Negative," based on the uncertainty accompanying its exposure to the Deepwater Horizon oil rig explosion, which continues to spew oil into the Gulf of Mexico.

Although the share price of Transocean has risen recently, for the year they are down about 47 percent, and not all of that is related to the oil accident.

One certainty is legal costs for Transocean will rise said Moody's, and it's in relationship to the unknown future liabilities which has driven the rating agency to lower their outlook for the oil company.

At this time investigations haven't uncovered any responsibility for Transocean in the circumstance, but investigations haven't really picked up yet, as most are waiting for the leak to be solidly plugged before traveling down that path.

Transocean had been having a tough year already before the oil accident, having first-quarter earnings plunge by 27 percent, as revenue dropped and utilization rates plunged.

If Transocean is found to have some liability, they won't only have to deal with the U.S. government, but it's possible BP (NYSE:BP) could sue them for damages that they've already had to pay out, and will continue to pay out in the future.

Moody's (NYSE:MCO) Downgrades BP (NYSE:BP)

Moody's (NYSE:MCO) has joined Fitch Ratings in downgrading BP (NYSE:BP), dropping their senior unsecured ratings one, from Aa1 to Aa2.

While these ratings remain good ratings, it's a precursor to what could come if BP isn't able to turn things around in the Gulf by stopping or slowing down the oil leak soon.

The move by Moody's was made because of that very thing, where the costs of cleaning up the Gulf and the unknown legal ramifications the company will experience had concerns over debt high, as well as the increasing possibility BP could ultimately default on the debt.

Moody's said there could be further downgrades in the near future if the circumstances don't change.

Caterpillar (NYSE:CAT) Credit Outlook Raised by Moody's (NYSE:MCO)

Moody's (NYSE:MCO) raised the credit outlook for Caterpillar (NYSE:CAT) today, and the stock rose by almost 3 percent to close at $60.86.

The credit rating outlook includes Caterpillar, as well as the financing arm of the company, Caterpillar Financial Services Corp.

Caterpillar's investment grade "A2" rating was raised from "Negative" to "Stable" by Moody's, who themselves have been under fire lately for ratings they made for bonds which were backed by what became worthless mortgages.

Moody's reasoning was that Caterpillar has a much stronger business model after they restructured last year. Guidance from Caterpillar in their quarterly report was they were increasing production in response to increasing global demand.

I wonder if that optimism would be adhered to in light of the China inflation battle and sovereign debt crisis in Europe?

BP (NYSE:BP), Anadarko (NYSE:APC), Transocean (NYSE:RIG), Cameron International (NYSE:CAM) and Halliburton (NYSE:HAL) Credit Cloud

One of the many clouds lingering over BP (NYSE:BP), Anadarko (NYSE:APC), Transocean (NYSE:RIG), Cameron International (NYSE:CAM) and Halliburton (NYSE:HAL), in the Deepwater Horizon oil rig explosion and resultant oil spill is how it will pressure the credit of the copmanies going forward.

BP is the obvious company whose liability and credit rating could be strongly impacted by the situation, although Anadarko Petroleum is the one company that has a lot of uncertainty connected to how it will play out with their credit rating, according to Moody's (NYSE:MCO).

Transocean could also be hit hard because of uncertainty about liability as well, which they may have a hard time meeting.

The strongest of the companies, Cameron International and Halliburton, should come out okay, as they won't bear the brunt of the responsibility in the incident, and they have strong insurance coverage and liquidity.

Even so, in situations like these, it's far from clear how things will play out until it all unfolds, casting a cloud on the overall credit situation for all of them.