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Credit rating agency Standard & Poors just issued a statement saying that if Spain were to receive a full sovereign bailout from the troika of European creditors would not spark any additional downgrades to Spanish government debt.In fact, according to the rater, it would probably actually be a great thing for the country, even though it may be unlikely in the near term:
Should Spain decide to request a full bailout, this would, in our view, constitute an official acknowledgement that the government is facing ongoing risks to financing itself in the capital markets at sustainable rates. However, we think that the potentially advantageous terms Spain could receive under a full bailout could enhance the chances of success of Spain’s already ambitious and politically challenging fiscal and economic reform agenda.
Nevertheless, we expect that resistance to this agenda will continue to grow at the regional and national level as disposable incomes continue to decline in the near term and as Spain’s labour market conditions remain very weak.
However, if a country like Greece were to exit the euro, S&P is not so optimistic on the outlook for Spain:
In our view, a eurozone exit by any member sovereign would implicitly reintroduce currency risk in cross-border financial transactions. Without a robust policy response from eurozone political and monetary authorities, a Greek (or other) exit could well hasten further capital outflows from Spain and from other “peripheral sovereigns”. An exit might also carry the risk of permanently jeopardizing the ability of the Spanish public and private sectors to access financing at sustainable rates.
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