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22 Feb 2014
Moody's upgrade Spain to Baa2; Outlook positive
FXStreet (San Francisco) - Moddy's Investors Service decided to upgrade Spain's government bond rating to Baa2 from Baa3 and assigned a positive outlook according to a recent press release published by the agency.
Spain is performing a more sustainable growth model and improvements in government funding conditions. However, "Spain's creditworthiness remains constrained by low fiscal strength as a result of the government's still significant budget deficit (7.0% of GDP in 2013), and a high debt-to-GDP ratio (approximately 94% of GDP in 2013) which Moody's expects to peak only in 2016 at a level of above 102% of GDP."
Key quotes:
The rebalancing of the Spanish economy towards a more sustainable growth model, which is being underpinned by structural improvements in the country's external competitiveness, and the ongoing deleveraging in the domestic economy.
The progress made in implementing broad structural reforms, particularly in the labour market and the public pension system, structural fiscal measures and changes to the fiscal framework for the country's regional governments as well as the restructuring of the Spanish banking system.
These efforts support Moody's expectation of stronger, more sustainable economic growth over the medium term and continued improvements in the resilience of government finances.
The Spanish economy is still confronted with a relatively weak banking system with still deteriorating asset quality and the need to reduce the high levels of private-sector debt. Unemployment will only decline slowly from its current elevated levels.
Spain is performing a more sustainable growth model and improvements in government funding conditions. However, "Spain's creditworthiness remains constrained by low fiscal strength as a result of the government's still significant budget deficit (7.0% of GDP in 2013), and a high debt-to-GDP ratio (approximately 94% of GDP in 2013) which Moody's expects to peak only in 2016 at a level of above 102% of GDP."
Key quotes:
The rebalancing of the Spanish economy towards a more sustainable growth model, which is being underpinned by structural improvements in the country's external competitiveness, and the ongoing deleveraging in the domestic economy.
The progress made in implementing broad structural reforms, particularly in the labour market and the public pension system, structural fiscal measures and changes to the fiscal framework for the country's regional governments as well as the restructuring of the Spanish banking system.
These efforts support Moody's expectation of stronger, more sustainable economic growth over the medium term and continued improvements in the resilience of government finances.
The Spanish economy is still confronted with a relatively weak banking system with still deteriorating asset quality and the need to reduce the high levels of private-sector debt. Unemployment will only decline slowly from its current elevated levels.