Fitch downgrades Spain's credit rating by three notches

Fitch says the downgrade reflects negative economic and market environment in Spain. (File photo)

Source: Press TV
http://www.presstv.ir/detail/2012/06/07/245089/fitch-downgrades-spain-credit-rating/

Fitch credit ratings agency has downgraded Spain’s rating by three notches citing the country's banking crisis, mushrooming debt and recession as the main reasons for the downgrade.

The international agency announced on Thursday that it has cut Spain’s long-term foreign and local currency to 'BBB' from 'A' with a negative outlook.

According to a Fitch’s statement, the European state’s short-term rating has also been downgraded to 'F2' from 'F1'.

“Spain is forecast to remain in recession through the remainder of this year and 2013 compared to Fitch's previous expectation that the economy would benefit from a mild recovery in 2013,” the statement added.

Fitch also noted that Spain's high level of foreign debt has rendered it especially vulnerable to contagion from the ongoing crisis in Greece.

Meanwhile, the European Union is calling on Madrid to come clean on how it plans to finance the overhaul of its banking sector.

Spain, the eurozone’s fourth biggest economy, said on Tuesday it was effectively losing access to credit markets due to prohibitive borrowing costs and appealed to European partners to help revive its banks.

Spanish Economy Minister Luis de Guindos said after talks at the European Commission on Wednesday there were no immediate plans to apply for a bailout.

Spain would await the results of a report by International Monetary Fund (IMF) and an independent audit of the banking sector, both due this month, before taking decisions on how to recapitalize the banks, the Spanish official said.

Spain’s central bank reported last month that the country's economy will shrink in the second quarter of 2012, with the recession expected to continue until at least mid-2012.

Moody's lowers Japan's rating to Aa3

Businessmen pass before a prices board in Tokyo. (file photo)

Source: Press TV
http://www.presstv.ir/detail/195437.html

Major credit rating agency Moody's Investors Service has downgraded Japan's sovereign debt rating by one notch to Aa3.

The ratings agency, which performs international financial analysis on commercial and government entities, cut Japan's government debt rating on Wednesday, blaming the country's large budget deficits for the downgrade, Reuters reported.

The build-up of debt since the 2009 global recession was cited as another reason for the new rating, which concluded a review begun on May 31, putting pressure on the Japanese government to address the country's growing economic woes.

"Several factors make it difficult for Japan to slow the growth of debt-to-GDP and thus drive this rating action," Moody's said in a statement.

Japanese Finance Minister Yoshihiko Noda declined to comment on the Moody's move, but appreciated government efforts, saying, "The smooth sales of Japanese government bonds at recent auctions show that confidence remains unshaken.”

Japan is still struggling with aftermath of the huge quake and subsequent tsunami that hit the country back in March.

The credit rating assesses the credit worthiness of a government's debt issues, a financial indicator to potential investors of debt securities such as bonds.

Republicans rebuff Obama tax hikes

Republican House Speaker John Boehner (right) and House Majority Leader Eric Cantor (left)

Source: Press TV
http://www.presstv.ir/detail/194386.html

Top Republican lawmakers have rejected the US President Barack Obama administration's appeal for tax hikes on the rich and wealthy people.

House Speaker John Boehner and House Majority Leader Eric Cantor say the worst thing Washington can do for economy is raise taxes on the people we need.

"The worst thing Washington can do for our economy is raise taxes on the people we need to start hiring again," Cantor said.

In a USA Today opinion page, they also called for cuts to government-backed health and retirement programs.

This comes as a newly created Congressional committee faces a late-November deadline for recommending one-and-half trillion dollars in deficit cuts over ten years.

In a final deal reached to avoid a default this moth, President Obama signed legislation that did not include tax increases.

But the embattled president, whose job approval ratings have slumped, has said he will renew his push for such measures.