Spain Beset by Bank Crisis, Downgrades, Bond Pressure!

Guess who is winning?

• The Greece contagion is spreading. The rest of the PIIGS are in the crosshairs!
  -
  Spain beset by bank crisis, downgrades, bond pressure! 
  By Carlos Ruano and Julien Toyer | Reuters
  MADRID (Reuters) – Spain’s borrowing costs shot up at a bond auction on Thursday and its troubled banks suffered a double blow, with shares in part-nationalized Bankia diving and 16 lenders – including the euro zone’s biggest – having their credit ratings cut.      
  -       
  Official data confirmed Spain was back in recession and a newspaper reported a big outflow of deposits from Bankia, but the government said it had taken a fundamental step to strengthen Spain’s credibility by agreeing big budget cuts with the country’s free-spending regions.
  -             
  Moody’s Investors Service cut the long-term debt and deposit ratings of the 16 Spanish banks, including Banco Santander, the euro zone’s largest, saying the government’s ability to support some banks had weakened.
  -
  Spain’s banks, saddled with bad loans after a property boom collapsed, lie at the heart of the euro zone crisis as markets fear any major rescue would strain Madrid’s already stretched finances and possibly require an international bailout.
  -             
  Gary Jenkins, credit analyst at Swordfish Research, said Spain had problems which went beyond the risk of contagion from the crisis in Greece, whose future in the euro is in doubt
  -             
  “Whilst the attention of the world is on Greece, the fact is that Spain faces many challenges irrespective of how the Greek situation is finally resolved,” he wrote in a note.
  -             
  Moody’s cut the rating of BBVA, Spain’s second largest lender, as well as Santander even though both are generally regarded as sound, unlike some of their smaller peers.
  -             
  Nicholas Spiro of Spiro Sovereign Strategy said the government of Prime Minister Mariano Rajoy was not handling the crisis well. “Sentiment towards Spain is deteriorating with each passing day, mainly because of a loss of confidence in the Rajoy government’s approach to tackling the problems in the banking sector,” he said.
  -
  read more!

end