Banco Sabadell | S&P has lowered its outlook for Endesa from stable to negative, in line with the action it took in the case of ENEL (holds 70% of the Spanish utility). However it has maintained the rating at BBB+. Valuation: The news has a negative slant, although the impact is limited. The planned investments, along with the increase in debt, are behind this revision.
Renta 4 | S&P has raised its rating on Repsol from BBB to BBB+, while maintaining its A-2 in the short-term, with a stable outlook. The ratings agency has based its move on a backdrop of high raw material prices, divestments and Repsol’s prudent financial policies to strengthen its balance sheet and improve credit measures. S&P flags that the market situation will favourably affect the company throughout the cycle. This…
S&P has warned of the possibility of a second wave of sovereign credit rating downgrades around the world. So far in 2020, the firm has downgraded ratings or outlook for 60 countries. The problem lies in the effects of COVID-19 that be will dragged on over the next few years. In fact, some countries will add 15-20 GDP points to their public debt, which otherwise would have taken four or five years to accumulate. In addition, public spending will continue to be above normal for a period that can extend 3-5 years.
Rating agency S&P has changed Spain’s rating outlook to “negative” due to the pandemic. While maintaining the country rating at “A,” the agency warns of the coronavirus’ strong impact on Spain’s economy. For this reason it has worsened its perspectives from “stable” to “negative.” S&P also justifies its decision on the possibility that an agreement will not be reached over next year’s budget.
S&P has revised Spain 2020 GDP downwards from +1.5% to -1.8%, rebounding +3.1% in 2021, +1.4% in 2022 and +1.5% in 2023. Meanwhile, estimates for the unemployment rate are 14.6% in 2020 compared to 14.1% in 2019, 15.6% in 2021, 15.2% in 2022 and 15.0% in 2023. For its part, Moody’s does not expand on this information; it merely confirms its ratings and outlook.
S&P has reduced its estimate of GDP for the euro area by 5 tenths in 2019 from +1.6% in November to +1.1%. In 2020 it forecasts a growth of +1.4% (vs. +1.6% previous), +1.4% also in 2021 (vs +1.5% previous) and +1.3% in 2022.
Standard and Poor’s maintained Spain´s rating without changes, at A- with positive perspective. Among the reasons: the uncertainties over the next elections and the tensions in Catalonia.
Yann Le Pallec, global head of ratings at S&P Global Rating (S&P), says that the ratings agency will upgrade Spain this month if current trends are maintained. The executive said that Spain’s current rating is A- with a positive perspective, which implies that if certain conditions are fulfilled there will be a rise in credit rating.
Global equities have held up fairly well in light of the generally negative news flow, entirely driven by the United States, where stocks are up 9.6% year to date, while the euro area, Japan and emerging markets have underperformed. In this context, the Research team from AXA IM points that earnings momentum remains “robust” with the second quarter earnings season posting “positive growth” and “surprising” on the upside across most major regions.
Spain’s economic growth has only just begun. According to Morgan Stanley’s macroeconomists, the last Spanish cycles have lasted increasingly longer, from ’82 to ’93 and from ’94 to ‘2013.