Having told the world that it will borrow billions (and cut capex) to “return all free cash to investors,” it appears ratings agency S&P just needed to remind McDonalds that Shareholder-friendly releveraging no longer comes for free…
*S&P LWRS MCDONALD’S RTG TO ‘BBB+’ ON SHR BUYBACK PLANS
Who could have seen that coming?
– Moody’s “Junks” Russia, Expects Deep Recession In 2015 (ZeroHedge, Feb 20, 2015):
Having put Russia on review in mid-January, Moody’s has decided (somewhat unsurprisingly) to downgrade Russia’s sovereign debt rating to Ba1 (from Baa3) with continuing negative outlook. The reasons:
- *MOODY’S SAYS RUSSIA EXPECTED TO HAVE DEEP RECESSION IN ’15, CONTINUED CONTRACTION IN ’16
- *MOODY’S SEE RUSSIA DEBT METRICS LIKELY DETERIORATING COMING YRS
We assume the low external debt, considerable reserves, lack of exposure to US Treasuries, and major gold backing were not considered useful? Moody’s concludes the full statement (below) by noting that they are unlikely to raise Russian sovereign debt rating in the near-term.
* * *
Kind of ironic then that Russia is the best performing stock market in the world this year!!
* * *
Full Moody’s Statement: Continue reading »
– S&P Downgrades Greece, Suggests Worst Case Scenario With Bank Runs And “Capital Controls”: Full Report (ZeroHedge, Feb 6, 2015):
And the hits keep coming. On the heels of a demand for repayment of ECB’s profits from GGB bond gains and to extend the T-Bill limit to give the nation time to negotiate with EU leaders (i.e. a Bridge Loan) which Jeroen Dijsselbloem already dismissed earlier in the day, S&P just piled on…
- GREECE RATINGS CUT TO B- FROM B BY S&P; MAY BE CUT FURTHER
This downgrade comes just 5 months after upgrading Greece because “risks to fiscal consolidation in Greece have abated.” EURUSD is not moving much (having already cratered after US payrolls) but Greek stock ETFs are sliding once again. Continue reading »
– S&P Downgrades Numerous European Banks, Warns Deutsche Bank May Be Next (ZeroHedge, Feb 3, 2015):
Just hours after apparently settling its suit with the USA (not at all retaliation for downgrading them), S&P has taken the big red marker out on a slew of European banks:
- Downgrades: Credit Suisse, Barclays, Lloyds, Bank of Scotland, RBS, HSBC, and Ulster Bank
- On Watch Negative: Raiffeisen Zentralbank, MBank, Unicredit, Commerzbank, and Deutsche Bank
The driver of the shift in perspective is the apparent removal of the ‘bailout put’, as the prospect of “extraordinary government support” appeared less likely under recently passed bail-in legislation.
– S&P Settles DOJ Lawsuit For $1.5 Billion; Agrees Not To Accuse Government Of Retaliation For US Downgrade (ZeroHedge, Feb 3, 2015):
As had been widely rumored in the past two weeks, and as the WSJ reported overnight, moments ago McGraw Hill, parent of disgraced rating agency S&P, entered into a $1.5 billion settlement to fully resolve the DOJ lawsuit regarding S&P ratings on RMBS and CDOs. As the WSJ reported overnight, In the “span of about 30 hours, the Justice Department lowered its asking price and backed off demands that S&P admit to violating laws when it issued rosy grades on risky mortgage deals, the people said.” But the bottom line: ‘S&P agreed to … withdraw its assertion that the Justice Department lawsuit was political retaliation for the ratings firm’s 2011 downgrade.”
H/t reader squodgy:
“If a an IMF/Fed puppet ratings agency classes one as junk….it must be good news.”
– S&P downgrades Russia’s sovereign credit rating to below investment grade (CNBC, Jan 26, 2015):
Standard & Poor’s on Monday downgraded Russia’s sovereign credit rating to below investment grade, as the country’s economy continues to weaken.
S&P slashed Russia’s sovereign credit rating to BB+ from BBB- and said the outlook is negative, reflecting its view that Russia’s monetary policy flexibility could diminish further.
This is the first time in more than 10 years that Russian sovereign debt has been rated below investment grade, in what some call “junk” territory. Continue reading »
Deceiving and lying to the American people is OK:
– Welcome to the Recovery (New York Times, by Timothy Geithner, August 2, 2010)
– Downgrading The US Will Cost S&P $1.5 Billion (ZeroHedge, Jan 20, 2015):
Remember when S&P forgot for a second that it lives in a world of pretend free speech, and where telling the truth would promptly result in a lawsuit by none other than the US government under false pretenses (and from which Buffett darling Moody’s was excluded) after it downgraded the US from AAA to AA+ in the summer of 2011? A downgrade which as Bloomberg previously reported led to this exchange with then Treasury Secretary Tim Geithner: “S&P’s conduct would be looked at very carefully,” Geithner told McGraw according to the filing. “Such behavior would not occur, he said, without a response from the government.”
Well, S&P will never make the same mistake again, because according to Reuters, it will cost it $1.5 billion to settle with the government and put the whole “downgrade” episode in the past.
- S&P SAID IN SETTLEMNT TALKS WITH WITH DOJ,STATES: RTRS
- S&P SAID IN SETTLEMNT TALKS FOR $1.5B: REUTERS
- SEC SAID TO BAN S&P FROM RATING PART OF CMBS MARKET FOR A YEAR
- S&P SETTLEMENT WITH SEC SAID TO INCLUDE $60 MILLION FINE
- S&P SETTLEMENT ON CMBS SAID TO BE ANNOUNCED AS SOON AS TOMORROW
And let that be a lesson to anyone else who thinks the First Amendment is anything but window dressing.
– Furious Russia, Downgraded To Just Above Junk By S&P, Proposes “Scorched Earth” Retaliation Against NATO Countries (ZeroHedge, April 25, 2014):
Cyprus and Russia – what’s the difference (aside from the fact that the former was a money laundering offshore center of the latter until last year of course)?
If you said one is a lackey to statist, selfish banker interests, and after having its economy thoroughly destroyed by the great doomed European sociopolitical (and pathological) experiment, came crawling back to its Eurozone masters, while the other couldn’t care one bit about Pax Petrodollariana and the global central bank cabal, you are right. In which case it will also be clear why a few hours ago that joke of a rating agency, Standard & Poor’s, which also earlier announced it was “affirming” France at an AA rating making it very clear it will no longer accept being sued for telling the truth and downgrading sovereigns or otherwise have its offices abroad raided, not only upgraded Cyprus from B- to B (please deposits your funds in Cyprus banks now: they are safe, S&P promises), but – far more importantly – delivered a political message to the Kremlin, and downgraded Russia from BBB to BBB-, one short notch away from junk status. This was the first downgrade of Russia by S&P since December 2008.
– Moody’s downgrades Ukraine to ‘default imminent’ (RT, April 5, 2014):
Moody’s Investors Service has downgraded Ukraine’s government bond rating one notch from Caa2 to Caa3, citing the current political crisis and deepening economic instability as reasons for its negative outlook.
The Caa rating is a credit risk grading pertaining to investments that are both very poor quality and entail a high credit risk. The current downgrade drops Ukraine from Moody’s “extremely speculative” rating to “default imminent with little prospect for recovery.”
Moody’s said the downgrade was driven by three factors, which “exacerbate Ukraine’s more longstanding economic and fiscal fragility.”
– Moody’s Puts Russia On Downgrade Review; Cites Event Risk, Investor Sentiment, And Weakening Economy (Zerohedge, March 28, 2014):
Hot on the heels of what S&P said was not a “politically motivated” shift to rating watch, Moody’s (who did not downgrade the USA and are not currently in a lawsuit over such terrible misrepresentations) has decided now is the time to put Russia on rating downgrade watch. The decision was triggered by 3 key factors: the weakening of Russia’s economic strength, potential shifts in investor sentiment, and susceptibility to event risk.
Full report below… Continue reading »
– Netherlands loses ‘AAA’ credit rating at S&P (MarketWatch, Nov 29, 2013):
LOS ANGELES (MarketWatch) — Standard & Poor’s on Friday downgraded its long-term sovereign credit rating on the Netherlands to AA+ from AAA, citing growth concerns. S&P said the country’s growth prospects are weaker than it had previously anticipated. “We do not anticipate that real economic output will surpass 2008 levels before 2017, and believe that the strong contribution of net exports to growth has not been enough to offset a weak domestic economy,” S&P said in a statement. The outlook is stable, reflecting the agency’s view “that risks stemming from low growth and the related fiscal outturn are balanced against strong export performance, a net creditor position, and high GDP per capita.”
– Fitch puts US debt rating on watch for downgrade (AFP, Oct 15, 2013):
Rating agency Fitch on Tuesday put the United States on warning for a downgrade after Congress failed to reach a deal on raising the country’s debt ceiling.Fitch placed the United States’s top-grade AAA rating on a “negative watch”, citing the possibility the Treasury could default on its obligations after October 17 if the ceiling is not raised.
– Meanwhile, In A (European) Galaxy Far, Far Away… (ZeroHedge, July 10, 2013):
Submitted by Bill Blain of Mint Partners,
Another day of fraught wonderment ahead of us. What does it all mean? China economic data increasingly suggests there is a serious problem, (that’s still a few points below crisis – but recent experience suggests the politics of mobs can turn ugly with surprising speed!). On the other hand, yesterday’s US auctions went swimmingly well – so we can all relax about the taper? Er.. no. And while Spain gets a cheeky 15-yr bond issue completed (driven on the back of a large single order we strongly suspect), the Italians then get downgraded because of the weakening economy, deteriorating competitiveness and 1.9% negative growth outlook… “You can’t make this stuff up,” comments Chris, my head of Govvie Trading. Continue reading »
– S&P Downgrades Berkshire From AA+ To AA, Outlook Negative (ZeroHedge, May 16, 2013):
Obviously with Buffett a major shareholder of Moody’s, the only place where a downgrade of Berkshire could come from was S&P. Moments ago, the rating agency that dared to downgrade the US for which it is being targeted by Eric Holder’s Department of “Justice”, did just that. Continue reading »
– Egan-Jones Downgrades Germany From A+ To A, Outlook Negative (ZeroHedge, April 17, 2013):
The more you try to shut them up, the more they have to say…Just out from Egan-Jones
4/17/2013: Federal Republic Of Germany: EJR lowered A+ to A (Neg.) (S&P: AAA) (3413Z GR)
– Moody’s: Cyprus Euro Exit Risk Substantial (ZeroHedge, March 27, 2013):
Though it may seem a little like stating the obvious to many, Moody’s comments:
While the risk of a euro exit by Cyprus is substantial… …following the economic dislocation that will be caused by the restructuring of the island’s two largest banks and the imposition of capital controls in the country, it is possible that the risk of euro exit will increase further.
And so while the talking heads discuss Cyprus as a unique situation and too small to care about, it seems the reality of the last two weeks has actually raised their chance of Euro exit as opposed to bailed them into the Euro.
Moody’s lowers Cyprus’s country ceilings to Caa2
– Farewell AAA: Moody’s Downgrades The UK From AAA To Aa1 (ZeroHedge, Feb 22, 2013):
Just the headline for now:
- MOODY’S DOWNGRADES UK’S GOVERNMENT BOND RATING TO Aa1 FROM AAA
Someone must have clued Moody’s on the fact that the UK is about to have its very own Goldman banker, which means consolidated debt/GDP will soon need four digits. In other news, every lawyer in the UK is now celebrating because come Monday Moody’s will be sued to smithereens.
Cable not happy as it tests 31 month lows…
Full report below: Continue reading »
– McGraw-Hill, S&P Sued by U.S. Over Mortgage-Bond Ratings (Bloomberg, Feb 5, 2013):
McGraw-Hill Cos. (MHP) and its Standard & Poor’s unit were sued by the U.S. over claims S&P knowingly understated the credit risks of instruments that were central to the worst financial crisis since the Great Depression.
The U.S. Justice Department filed a complaint yesterday in federal court in Los Angeles, accusing McGraw-Hill and S&P of mail fraud, wire fraud and financial institutions fraud. Under the Financial Institutions Reform, Recovery and Enforcement Act of 1989, the U.S. seeks civil penalties of as much as $1.1 million for each violation. The company’s shares tumbled the most in 25 years yesterday when it said it expected the lawsuit, the first federal case against a ratings firm for grades related to the credit crisis.
From the article:
“I’m sure you have already guessed the ending: Egan-Jones is banned from for the next 18 months from rating US government debt. They’ve effectively been silenced from telling the truth.”
As I’ve said many times before: Prepare for collapse.
– Scam complete: the US government takes a page from Diocletian’s book… (Sovereign Man, Jan 25, 2013):
Early in the 4th century, Emperor Diocletian issued an infamous decree to control spiraling wages and prices in the rapidly deteriorating Roman Empire.
As part of his edict, Diocletian commanded that any merchant or customer caught violating the new price structures would be put to death.
This is an important lesson from history, and a trend that has been repeated numerous times. When nations are in terminal economic decline, governments will stop at nothing to keep the party going just a little bit longer.
– Fitch Issues Another Rating Warning For AmericAAA (ZeroHedge, Jan 15, 2013):
With precisely one month left until the early bound of the debt ceiling crunch and a possible US government shut down and/or technical default, and with M.A.D. warnings from the president and treasury secretary doing nothing to precipitate a sense of urgency (which will not arrive until there is a 20% market drop, so far consistently delayed but which will eventually happen), here comes the most toothless of rating agencies, French Fitch which somehow kept its mouth shut over the past 18 months, when US debt rose by over $2.1 trillion and debt to GDP hit 103%, shaking a little stick furiously, no doubt under guidance by its corporate HoldCo owners: French Fimilac SA.
There is a material risk the United States would lose its triple-A if there is a repeat of 2011 wrangling over raising the country’s self-imposed debt ceiling, rating firm Fitch said on Tuesday.
– Moody’s Warns On USAAA Rating; IMF Piles On (ZeroHedge, Jan 2, 2012):
Moody’s has stepped forward with the first warning shot across the bow that:
- *MOODY’S: MORE MEDIUM TERM ACTIONS MAY BE NEEDED TO SUPPORT Aaa
Has contradicted itself (from September) on the debt-ceiling breach; and warns that while the deal ‘mitigates’ some fiscal drag, it does not remove it. To wit: the IMF piles on:
- *IMF SAYS `MORE REMAINS TO BE DONE’ ON U.S. PUBLIC FINANCES
- *IMF SAYS U.S. DEBT CEILING SHOULD BE RAISED `EXPEDITIOUSLY’
Full statements below. Continue reading »
– Italian PM Monti quits as Berlusconi withdraws support (Irish Examiner, Dec 9, 2012):
Prime minister Mario Monti has told Italy’s president he is resigning because he can no longer govern after Silvio Berlusconi’s party withdrew crucial support.
The move paves the way for early elections a year after the unelected economist helped pull the country back from the brink of financial disaster.
Only hours earlier, 76-year-old billionaire media baron Mr Berlusconi had announced he would run for a fourth term as premier, aiming for a dramatic comeback after he quit in disgrace last November.
– One Less In The AAA Club: Moody’s Downgrades FrAAnce From AAA To Aa1 – Full Text (ZeroHedge, Nov 19, 2012):
After hours shots fired, with Moody’s hitting the long overdue one notch gong on France:
- MOODY’S DOWNGRADES FRANCE’S GOVT BOND RATING TO Aa1 FROM Aaa
- FRANCE MAINTAINS NEGATIVE OUTLOOK BY MOODY’S
Euro tumbling. In other news, UK: AAA/Aaa; France: AA+/Aa1… Let the flame wars begin
From the release:
Moody’s decision to downgrade France’s rating and maintain the negative outlook reflects the following key interrelated factors: Continue reading »
– S&P cuts Spain credit rating to near junk (Reuters, Oct 11, 2012):
Standard & Poor’s on Wednesday cut Spain’s sovereign credit rating to BBB-minus, just above junk territory, citing a deepening economic recession that is limiting the government’s policy options to arrest the slide.
The S&P downgrade comes with a negative outlook reflecting the credit ratings agency’s view that there are significant risks to economic growth and budgetary performance, plus a lack of clear direction in euro zone policies.
“In our view, the capacity of Spain’s political institutions (both domestic and multilateral) to deal with the severe challenges posed by the current economic and financial crisis is declining,” S&P said in a statement.
S&P’s two-notch downgrade from BBB-plus brings it in line with Moody’s Investors Service’s Baa3 rating. Moody’s has Spain on review for a possible downgrade.
– Fitch Warns UK Likelihood It Loses AAA Rating Has Increased (ZeroHedge, Sep 28, 2012):
One-by-one, the highest quality collateral in the world (according to ratings that is) is disappearing. To wit, Fitch warns that a downgrade of the UK’s AAA rating is increasingly likely: “weaker than expected growth and fiscal outturns in 2012 have increased pressure on the UK’s ‘AAA’ rating, which has been on Negative Outlook since March 2012.” The Negative Outlook on the UK rating reflects the very limited fiscal space, at the ‘AAA’ level, to absorb further adverse economic shocks in light of the UK’s elevated debt levels and uncertain growth outlook. Global economic headwinds, including those emanating from the on-going eurozone crisis, have compounded the drag on UK growth from private sector deleveraging and fiscal consolidation as well as from depressed business and consumer confidence, weak investment, and constrained credit growth. But no mention of unlimited QE? Continue reading »
– Egan Jones Downgrades US From AA To AA- (ZeroHedge, Sep 14, 2012):
From Egan Jones, who downgraded the US for the first time ever last July, two weeks ahead of S&P:
Synopsis: UNITED STATES (GOVT OF) EJR Sen Rating(Curr/Prj) AA-/ N/A Rating Analysis – 9/14/12 EJR CP Rating: A1+ Debt: $15.2B EJR’s 1 yr. Default Probability: 1.2%
Up, up, and away – the FED’s QE3 will stoke the stock market and commodity prices, but in our opinion will hurt the US economy and, by extension, credit quality. Issuing additional currency and depressing interest rates via the purchasing of MBS does little to raise the real GDP of the US, but does reduce the value of the dollar (because of the increase in money supply), and in turn increase the cost of commodities (see the recent rise in the prices of energy, gold, and other commodities). The increased cost of commodities will pressure profitability of businesses, and increase the costs of consumers thereby reducing consumer purchasing power. Hence, in our opinion QE3 will be detrimental to credit quality for the US.
– Moody’s Warns Of 1 Notch Downgrade If A Bitterly Divided Congress Does Not Begin To Cooperate (ZeroHedge, Sep 11, 2012):
13 months ago, in the aftermath of the debt ceiling fiasco, which we now know was a last minute compromise achieved almost entirely thanks to the market plunging to 2011 lows, S&P had the guts to downgrade the US. Moody’s did not. Now, it is Moody’s turn to fire up the threat cannon with a release in which it says that should the inevitable come to pass, i.e. should congressional negotiations not “lead to specific policies that produce a stabilization and then downward trend in the ratio of federal debt to GDP over the medium term” then “Moody’s would expect to lower the rating, probably to Aa1” or a one notch cut. Moody’s also warns that should a repeat of last year’s debt ceiling fiasco occur, it will also most likely cut the US. Of course, that the US/GDP has risen by about 8% since the last August fiasco has now been apparently forgotten by both S&P and Moodys. Sadly, continued deterioration in the US credit profile is inevitable, as every single aspect of modern day lives that is “better than its was 4 years ago” has been borrowed from the future. More importantly, with the S&P at multi year highs courtesy of Bernanke using monetary policy to replace the need for fiscal policy, Congress will see no need to act, and Moody’s warning will be completely ignored. This will continue until it no longer can.From Moody’s:
Budget negotiations during the 2013 Congressional legislative session will likely determine the direction of the US government’s Aaa rating and negative outlook, says Moody’s Investors Service in the report “Update of the Outlook for the US Government Debt Rating.”
If those negotiations lead to specific policies that produce a stabilization and then downward trend in the ratio of federal debt to GDP over the medium term, the rating will likely be affirmed and the outlook returned to stable, says Moody’s.
If those negotiations fail to produce such policies, however, Moody’s would expect to lower the rating, probably to Aa1.