DBRS Places Spain’s Ratings Under Review with Negative Implications

DBRS, Inc. (DBRS) has today placed the ratings of the Kingdom of Spain’s long-term foreign and local currency debt Under Review with Negative Implications. The ratings for the Kingdom of Spain’s foreign and local currency debt are at A (high).

This action reflects DBRS’s assessment that downside risks to growth in the Euro area have intensified as a result of systemic concerns emanating from Greece. Recent political developments have called into question the Greek government’s willingness and capacity to comply with its EU-IMF adjustment programme and sustain its membership in the European Monetary Union. DBRS will assess, over the next three months, the risks stemming from Greece and to what extent uncertainty over the future of Greece, combined with concerns over sovereign debt sustainability and financial sector fragility in the Euro area, may adversely affect Spain’s efforts to stabilise its public debt.

The ratings could remain at their current level if financial stresses ease across the Euro area and in Spain. However, the ratings could be downgraded if systemic concerns deepen, adding to the challenges that Spain is facing in stabilising its public debt.

Notes:
All figures are in Euros unless otherwise noted.

The principal applicable methodology is Rating Sovereign Governments, which can be found on the DBRS website under Methodologies.

The sources of information used for this rating include the Bank of Spain, Ministry of Economy and Finance, Instituto Nacional de Estadística (INE), IMF and Haver Analytics. DBRS considers the information available to it for the purposes of providing this rating was of satisfactory quality.

This credit rating has been issued outside the European Union (EU) and may be used for regulatory purposes by financial institutions in the EU.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

This is an unsolicited rating. This rating did not include participation by the rated entity or any related third party and is based solely on publicly available information.

Lead Analyst: Pedro Auger
Rating Committee Chair: Alan G. Reid
Initial Rating Date: 21 October 2010
Most Recent Rating Update: 3 May 2012

For additional information on this rating, please refer to the linking document under Related Research.