Rating cuts would hurt Spain more than Portugal

A Spanish ratings cut may hit government bond markets harder than the recent salvo of downgrades on Portugal because, unlike its neighbor, Spain is seen capable of escaping without an international bailout.

Fitch gradually slashed Portugal's sovereign credit rating by five notches over the two weeks after the Portuguese government collapsed on March 23. Other agencies downgraded Portugal but the market reaction was muted, raising questions over whether the ratings firms are behind the curve.

But analysts caution that Spain is in a wholly different position and that a change in the external view of its creditworthiness would have a negative impact.

Read Full Article from Reuters

- Posted: 2011-04-08 10:28:30

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