A Spanish Bailout? Don’t Hold Your Breath

From the guardian: It is a rule of thumb among eurozone crisis observers that the more something is denied by officials, the more likely it is to happen. With Spain’s borrowing costs at euro-area record highs, its officials insist it will not need a full bailout programme. To most of us, however, it seems no longer […]

EU Summit: Some Good Progress, But Any Game Changers?

This EU summit marked many firsts for eurozone crisis era EU summits: it was the first time Greece hasn’t been discussed in years, it was the first time Italy and Spain bonded together and it was the first time President Hollande attended an EU summit. By dinner time on Thursday, the EU summit seemed a […]

RGE’s Arnab Das Bloomberg Video on ECB Policy, Spain Outlook

Bloomberg: Arnab Das, managing director of market research and strategy at Roubini Global Economics, talks about fiscal and political integration in Europe, Italy’s public debt levels and European Central Bank monetary policy. He speaks with Maryam Nemazee on Bloomberg Television’s “The Pulse.”  

Spanish Bank Bailout Unlikely to Succeed

It has been abundantly clear that Spain would need a bailout for its sick banking system, and rumours have emerged that this could happen as early as this weekend. I doubt that the details of a plan will be agreed so soon as an independent stress test of the Spanish banking system is still being […]

Spain Following in Ireland’s Footsteps

Watching developments in Spain since the beginning of April has been source of non-stop déjà vu for anyone who spent 2010 watching events unfold in Ireland. There are a number of striking similarities between the position in which the Spanish government now finds itself and the Irish government’s situation in November 2010, just before it […]

Why Spain Won’t Regain Market Confidence

Spain is back in the limelight in the EZ crisis, where it has always belonged based on its fiscal, financial and economic fundamentals. Throughout this crisis, the liquidity or solvency of various sovereigns has been determined to a large degree by market sentiment. For Spain’s borrowing costs to recede again to sustainable levels, Spain needs […]

A Look at Fitch Ratings European Credit Outlook 2011

This post is a summary of Fitch’s views drawn from a recent Fitch conference: European Credit Outlook 2011, London January 21, 2011

  • Fitch are sanguine about the EZ crisis and expect a muddle through, despite noting substantial risks and not providing convincing explanations why they won’t happen or what will mitigate them.
  • In aggregate, banks should be able to transition to new Basel III via retained earnings.
  • But banks’ funding costs are at risk from the removal of government support: “Roughly one quarter of developed market EMEA IDRs are at their support floors and are vulnerable to rating downgrades arising in a ‘lower support’ bank resolution regime world”.
  • Covered bond programmes are quite sensitive to issuer downgrades.
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