France might be the next victim of S&P

Viliyana Filipova — Sun, 07 Aug 2011 19:34:22 +0000

The decision of the agency Standard & Poor’s lowered the credit rating to the U.S. cause serious discussions about the next party will lose considered risk-free evaluation – AAA. According to many analysts the most likely such a fate befall France. Currently the price of swaps to protect against default on the French debt is higher than that of countries with low credit rating such as Malaysia, Thailand, Japan, Mexico, Czech Republic, and that this debt in the U.S. state of Texas, says media .
“In my opinion France is not a party worthy of the AAA rating,” said Paul Donovan, a chief economist at Swiss giant UBS. “France can not print money, which is the main distinction from the U.S.. The country simply is not considered by market participants as a AAA rating”, he said. While in the past few months and the three leading rating agencies have confirmed their top rating in France, market confidence shows otherwise.
“If Italy and Spain have problems, then can we be sure that France can still be seen as part of the” core “of the euro area. This group has fewer countries, “said chief economist for UniCredit area of Mark Valley.
Currently the ratio of debt to gross domestic product in France is 84.7 percent – far below the 120.3 percent, which is Italy, but as a percentage of the economy’s debt to France is growing twice as fast as Italian since 2007. Another worrying point is that France had a large budget deficit of Italy in every year since 2006. Moreover, the Italian credit rating is A +, which is four levels below that of France. Currently in the euro area countries rated AAA, except France, are Germany, Austria, Finland, Luxembourg and the Netherlands. In this situation, France is a country with a AAA rating, which insurance to protect against default on debt is the most expensive. It traded at 143.8 basis points, which is nearly three times the U.S. price. Safest country in the markets is Switzerland, which this facility has cost 35.3 basis points. A basis point means that will cost 1000 dollars a year to protect the position of $ 10 million debt.

Moody’s ratings to increase the prospect of Latvia and Lithuania

Viliyana Filipova — Thu, 01 Apr 2010 14:56:53 +0000

Moody’s Investors Service to raise the credit ratings outlook for Latvia and Lithuania, as their economies recovered faster than expected. Baa1 rating to the prospect of Lithuania was upgraded to stable from negative, and also that of Latvia, but rating Baa3. Credit rating agencies increase the prospects for regional stability signals and actions of governments to address the budget deficit. Over the past two months by Standard and Poor’s and Fitch Ratings raised its outlook for Estonia, Latvia and Lithuania stable from negative. “The Lithuanian economy is stabilized faster than expected and those of other Baltic countries,” said Kenneth Orchard, an analyst at Moody’s. According to him the recession ended in the third quarter of last year and this will have a moderate positive effect on the finances of the Government, expressed in a smaller budget deficit and slower growth of debt. In Latvia, the “worst of the recession has passed and will support the restoration of Finance of the Government and the banking sector,” said Orchard. “The prospect of a disorderly devaluation of the currency is now unlikely.” Latvia requested assistance from the EU and the International Monetary Fund amounting to 7.5 billion in 2008, having acquired its second largest bank. In the fourth quarter of the country’s economy contracted by 16.9 per cent.
Prime Minister of Latvia Valdis Dombrovskis has taken stringent measures last year, reducing the budget by about 10 per cent of GDP. For its part, Prime Minister Andrius Kubilius, Lithuania reduce spending and increase taxes to save about 9 percent of GDP. Baltic countries, which maintain a fixed exchange rate against the euro, using deflation and a reduction of wages to restore their competitiveness.

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France might be the next victim of S&P

Moody’s ratings to increase the prospect of Latvia and Lithuania