domingo, 1 de diciembre de 2013

domingo, diciembre 01, 2013

Europe News

Netherlands Loses Triple-A Rating, Spain Outlook Raised

S&P Cites Netherlands Weakening Growth Prospects

By Maarten van Tartwijk and Christopher Bjork

Updated Nov. 29, 2013 6:43 a.m. ET



Credit-ratings firm Standard & Poor's raised the outlook for Spain's sovereign-debt rating, but cut the Netherlands' credit rating, in moves that reflect how parts of the crisis-hit Southern Europe are starting to stabilize, while some economies in Europe's stronger North are weakening.



The Netherlands became the latest country to be stripped of a coveted triple-A credit rating Friday. S&P downgraded the country to double-A-plus, citing worsening growth prospects.

S&P raised Spain's outlook on Friday to stable from negative, while keeping the rating at triple-B-minus, just a notch above junk-bond status. The improved outlook reduces the danger of a further downgrade to junk for the euro zone's fourth biggest economy.

S&P also upgraded Cyprus, which received an international bailout this spring, to B-minus from triple-C-plus

Grading Global Debt

Click to view interactive.


The ratings changes made little impact on financial markets, which no longer react as sensitively to ratings changes for euro-zone members as they did at the height of financial panic in the 17-country currency bloc. But S&P's moves mirror recent economic data that suggest the worst may be over for Spainwhereas the Netherlands faces growth and financial worries even though it is seen as part of Europe's healthy economic "core."

Spain returned to slow growth in the third quarter after more than two years of recession. Spain's economy is expected to contract in 2013 as a whole, but to recover slowly from 2014.

The Dutch economy, however, is expected to grow by only 0.2% in 2014, making it one of the weakest performers in the euro zone, according to European Union forecasts.

While the Dutch economy returned to growth in the third quarter, the recovery is expected to remain subdued in 2014 and beyond, S&P said. "We do not anticipate that real economic output will surpass 2008 levels before 2017," S&P said. "The strong contribution of net exports to growth has not been enough to offset a weak domestic economy."

Consumer spending in the Netherlands is sliding thanks to Dutch households' heavy mortgage debts and slumping housing market. Dutch households are among the most indebted in Europe, and around one in four households have more mortgage debt than their home is worth.

Dutch government austerity measures, mostly consisting of tax increases, are further weighing on domestic demand.

S&P was in recent years the rating agency most critical of Spain's creditworthiness and once warned that the country was on a path toward effective insolvency. Just a year ago, many observers fretted that an S&P downgrade of Spain to junk could trigger a large-scale financial panic in euro-zone government bond markets.

S&P sounded a much more positive note Friday than in recent reviews of Spain's credit solvency, saying budget cuts and structural reforms are making the country's finances more sustainable, while the economy is on a modest growth path.

S&P said it expects Spain's real GDP to contract by about 1.2% in 2013 but then slowly recover. It added it expects Spain's GDP to grow by 0.8% next year, and by 1.2% in 2015.

The forecasts are roughly in line with Spain government's, and include warnings that all isn't well for Spain, as domestic demand remains very low and Spanish unemployment is very high at around 26% of the workforce.


—Peter Nurse in London and David Roman in Madrid contributed to this article.

0 comments:

Publicar un comentario