The Spain downgrade last night to BBB+, took the S&P rating below the rating from Moody’s of A3 by one notch (see equivalent rating scales in the chart below).
Fitch, on the other hand, has Spain Long Term debt at single A which is above Moody’s rating by one notch and above S&P’s rating by two notches now. This may suggest that Fitch might be pressured into lowering it’s rating sometime soon.
As Jamie pointed out in his post this morning (“Downgrades ain’t what they used to be….” ), the good ole sovereign downgrade just does not have the sting it once had. So although further catch-up downgrades are possible from Moody’s and Fitch, perhaps we can look forward to a futher rally in the EURUSD after the next shoe falls (or will it fall?). It stinks when the market does not do what you think it should do….
