Monday, May 31, 2010

· France warns that its AAA rating could be in jeopardy - François Baroin, the French Budget
Minister, told local television stations that holding on to the country’s AAA rating would be a “stretch”.
Baroin toned down his comments later and said that the Government was committed to the
“demanding” target of maintaining France’s top credit rating. London Times.

· Spain was downgraded by Fitch during the middle of NY trading on Fri (right after the European
close Fri); some color on the downgrade from JPMorgan’s TSY desk - Fitch changed the rating
from AAA to AA+ before even putting Spain on neg watch; Note that Moody's still has Spain at Aaa
while S&P had already downgraded them to AA back in late Apr (mid-AA, a bit lower than Fitch). This
Fitch move occurred after most in London had left for the long weekend and the Sov mkt was closed.
The expectation is that Spain CDS opens ~20bp wider on Tues. This Fitch action had been
speculated for a while and it isn't a game-changer.

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