Moody's Decides Not to Downgrade Spain's Sovereign Debt Further - Market Reaction Interesting

By: Ian Campbell | Thu, Oct 18, 2012
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It was reported yesterday the Moody's Investors Service has elected to leave its Spain sovereign debt rating at one credit rating level above 'junk', with a negative outlook. It apparently did this on basis of what it perceives is "a reduction in the risk of Spain losing market access because of the European Central Bank's willingness to buy the nation's bonds". The markets responded positively, with Spain's 10-year bond yield falling by 29 basis points to 5.52% as of mid-day (Greenwich Mean Time) yesterday.

The following things are worth thinking about:

One notch above "junk" with a negative outlook for any government bond isn't good. While the Moody's 'unchanged position' and the timing of its announcement is interesting, it is unlikely to be the last word on Spain's sovereign debt as we move forward.

You might also want to read:

Topical References: Spain dodges a bullet as debt rating upheld, from The Financial Post, from Bloomberg News, David Goodman and Lucy Meakin, October 17, 2012 - reading time 3 minutes. Also read:



Ian Campbell

Author: Ian Campbell

Ian R. Campbell, FCA, FCBV
Business Transition Simplified

Through his website and his Business Transition & Valuation Review newsletter Ian R. Campbell shares his perspectives on business transition, business valuation and world economic and financial markets influences on those two topics. A recognized business valuation and transition authority, he founded Toronto based Campbell Valuation Partners Limited (1976). He currently is working to bring his business valuation and transition experience to both business owners and their advisors in our new economic, business and financial markets normal.

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