Thursday, March 17, 2011

Who has the Red Debt in the Whole of European Union


You all have been reading in a few posts that Moodys has downgraded Spain, and now Portugal, there has been these debt crisis and this and that, and the public debt has gone up and so on, but now here is the fact sheet i found on Reuters website, and it will give you an idea of who is in which water, i mean who is in trouble and who is not,

German Chancellor Angela Merkel
Frankly speaking apart from Germany i don't have faith in any other EU Member, who is still good enough to foresee the crisis and make sure all other members are in line with their own measures as well. Germany has been making sure that a concrete bail out is presented and that European Union does its best to protect the interests and people of its member states.

There would be some details on what is an investment grade investment and a speculative grade investment, but i won't go into any furthure details, as the post itself will get a bit lengthy as you go on, like alot to digest in some time. So lets see the member states and their debt levels.

The dark ones are obviously under scrutiny and yes, there might be more cuts and downgrading with the passage of time in case of Greece and Portugal. Go through the whole of it in order to know what are these rating all about




And Now lets see what are these alphabets all about


LONG-TERM CREDIT RATINGS
STANDARD & POOR'S             MOODY'S                  FITCH
--------------------- INVESTMENT GRADE RATINGS ---------------
                 
                       AAA                                Aaa                         AAA
Obligations for which there is the lowest expectation of investment risk. Ca        pacity for timely repayment of principal and interest is substantial, such that adverse changes in business, economic or financial conditions are unlikely to increase investment risk substantially.

                         AA                                   Aa                           AA
 Obligations for which there is a very low expectation of investment risk. Capacity for timely repayment of principal and interest is substantial. Adverse changes in business, economic or financial conditions may increase investment risk albeit not very significantly.
                       
                            A                                      A                            A
 Obligations for which there is a low expectation of investment risk. Capacity for timely repayment of principal and interest is strong, although adverse changes in business, economic or financial conditions may lead to increased
investment risk.

                           BBB                                 Baa                        BBB
 Obligations for which there is currently a low expectation of investment risk. Capacity for timely repayment of principal and interest is adequate, although adverse changes in business, economic or financial conditions are more likely to lead to increased investment risk than for obligations in previous
categories.

--------------- SPECULATIVE GRADE RATINGS --------------------
                              
                               BB                                 Ba                           BB
Obligations for which there is a possibility of investment risk developing. Capacity for timely repayment of principal and interest exists but is susceptible over time to adverse changes in business, economic or financial conditions.

                                 B                                   B                             B
Obligations for which investment risk exists. Timely repayment of principal and interest is not sufficiently protected against adverse changes in business, economic or financial conditions.

                                CCC                             Caa                          CCC
Obligations for which there is a current perceived possibility of default. Timely repayment of principal and interest is dependent on favorable business, economic or financial conditions.

                                 CC                                Ca                              CC
Obligations which are highly speculative.

                                  C                                   C                                C
This rating may be used to cover a situation where a bankruptcy petition has been filed or similar action has been taken, but payments on this obligation are continued.

                                  D                                                                DDD/DD/D
Obligations which are currently in default. Fitch DDD designates the highest potential for recovery of amounts outstanding on any securities involved, and D the lowest recovery potential.

 ** S&P and Fitch ratings from AA to CCC may be modified by a plus or minus sign to show relative standing within the major rating categories.

** S&P ratings may have an 'r' attached to the ratings of instruments with significant non-credit risks to highlight risks to principal or volatility of expected returns which are not addressed in the credit rating.

 ** Moody's applies numerical modifiers 1, 2 and 3 in each generic rating classification from Aa through B. Modifier 1 indicates the obligation is ranked at the higher end of its generic rating.

So thank You Reuters for such a wonderful data. By the way, if many of these are to be rated as A2 or even investment grade, then how can they pose a threat to the overall dynamics of the financial regulations, in the country they are in. like they are saying that Portugal is A3 but it is investment grade, a country is going to be bailed out, but it is of investment grade, no wonder they also say that there is negative outlook imposed on them. Wow, so now you all know how we came in this crisis mode. Happy Bizzing


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