Spain’s economic woes took another hit when credit agency Moody’s cut the country’s bond rating three notches to Baa3. The rating is just one notch above classifying Spanish bonds as “junk bonds.”
The credit dip was attributed directly to the country’s 100 billion euro bailout from fellow euro zone countries that was approved over the weekend. Lenders have been stating concern for Spain’s future in the euro zone as a result of their continuing banking woes. Continue reading
Optimism about Spain’s banking bailout is fading fast after reports that Spain’s borrowing costs have risen to the highest point since the creation of the euro.
The benchmark 10-year bond yield peaked at 6.81%. The news created some ripples throughout the European Union as Italy’s 10-year bond yield hit 6.28%, the highest rate since January. Continue reading
Struggling banks led Spain to be the fourth and largest European Union nation to ask for a bailout. The country will receive up to 100 billion euro, however, some of the member nations, like the UK, are not contributing to the loan.
The news of the bailout initially sent worldwide stock markets soaring but the enthusiasm quickly wore off and many markets were trading lower than opening by mid-morning. Ratings agency Fitch downgraded the rating for two Spanish banks two ranks from A to BBB+. Fitch attributed the move to last week’s downgrade of Spain’s sovereign credit rating. Continue reading
Despite Spain’s insistence that a bailout was not imminent, a Dutch official leaked out word that emergency bailout talks could take out place this weekend.
Dutch finance minister Jan Kees de Jager told the BBC the situation in Spain was “urgent” and alluded to emergency talks. EU officials have officially stated that Spain would not be asking for emergency funds as early as Saturday. Continue reading
Luis deGuindos, Spain’s economy minister, stated today that the country is on the verge of asking for a bailout as reported in various media sources.
Any decision on a bailout request would be dependent on the outcome of audits of all Spanish banks. The results of the audit are not expected until the end of June. Continue reading
The possible departure of Greece from the euro zone combined with the worsening economic conditions in Spain and record high unemployment in the euro zone are threatening to cause a disintegration of the continent wide currency.
Olli Rehn, Brussels’ most senior economic official, says unless the nations that use the Euro are bound closer together the euro zone could collapse.
Italy’s leaders called for using euro bonds to create a path to “common debt” for Europe. Spain’s government is proposing a common fiscal authority for Europe to sync budgets of the member nations and manage overall debts. Continue reading
The contraction rate of manufacturing in Spain ranked higher than Greece’s rate in the month of May. Spain’s rate declined at the highest rate since May 2009.
Spain’s figure of 42.0 was the worst in the eurozone below Greece’s level of 43.1.
The manufacturing decline in many of the endangered eurozone nations is beginning to impact the stronger nations like France and Germany. Continue reading
Three Spanish savings banks are considering a merger to try and strengthen themselves against the amplifying debt crisis in the country.
The three boards of each bank are meeting today to determine the fate of the merger.
The merger comes amid news that investors are fleeing the Spanish markets as the bond yields for Spanish bonds rose to an all time high. Investors appear to be running to Germany as an influx of investment capital drove the German bond yields significantly lower. Continue reading
Bankia, Spain’s fourth-largest bank, has suspended trading of its shares as the board of directors plans to reformulate accounts for 2011 and then ask the government for a bailout of more than 15 billion euros.
The bank was partly nationalized two weeks ago and had the government inject 4.5 billion euros into the bank. Continue reading
Schools and universities in Spain closed in protest today because the government is planning to cut more than twenty percent from budgets.
The cuts, which will increase class sizes and require teachers to work more hours for the same pay, will force university tuition feeds to jump by more than twenty-five percent. Continue reading