Debt fears to sour holiday mood
Persisting fears about sovereign and related debt from Greece to Dubai will keep investors occupied into 2010…
Greek assets have taken a hammering after two credit ratings agencies downgraded the euro zone member this month on concerns about its fiscal health…
Standard & Poor's also cut Mexico's credit ratings this week by one notch on fiscal concerns, while worries about Britain's fiscal and economic health are nagging investors after sterling hit two-month lows against the dollar this week.
…Standard & Poor's downgraded Greece by one notch to BBB+ this week, saying a further downgrade was possible if the government fails to gain political support for a fiscal consolidation program. The move came just days after Fitch cut the country to BB-plus, the lowest sovereign rating in the euro zone.
Moody's, the third big rating agency, has placed Greece's A1 rating on review for a possible cut.
…Analysts warn that it may also be just a matter of time before the UK loses its triple-A rating with its public debt heading toward 100 percent of gross domestic product.
…”secondary deterioration in the UK's fiscal stance looks likely to translate to a structurally lower exchange rate," Michael Hart, strategist at Citi, noted. "A ratings downgrade for the UK now is increasingly likely. This may translate to a higher risk premium in the form of rising interest rates..."
Reuters, Dec 18, 2009