21:40 DJ Egan-Jones Downgrades Spain to CCC+ From B
Testo: NEW YORK--Egan-Jones slashed its rating on Spain for the fourth time in just over a month Wednesday, further pushing the country into junk status.
The ratings firm cut its rating on Spanish debt to CCC+ from B, with a negative outlook. The downgrade comes just two weeks after Spain's rating was lowered to B from double-B-minus by Egan-Jones. Earlier in May, Egan-Jones lowered Spain's rating two notches to double-B-minus from double-B-plus, which was preceded by Egan-Jones cutting Spain's rating by one notch and into junk territory.
While Egan-Jones, which is smaller than the world's three big ratings firms--Standard & Poor's, Moody's Investors Service and Fitch Ratings-- considers Spanish debt junk, all three of the larger ratings firms still see Spain as investment grade.
In its cut, Egan-Jones said the country continues to be weakened by government debt, citing a deficit of 9.6%, as well as a 1.7% decline in gross domestic product. Egan-Jones added that the country's unemployment level of 24.4% is also concerning. Additional bank losses and possible depositor withdrawals from the banking system add to the country's already weak fiscal position.
"Spain is short about EUR50 [billion] per year for social payments, EUR35+ [billion] per year for interest, and an additional EUR30 [billion] for asset growth," wrote Egan-Jones.
Following the decision from Egan-Jones, the euro dipped to $1.2568 from $1.2577 before the decision.
Egan-Jones increased its one-year default probability to 18% from 15% for the country.