Investing

Fitch Joins E.U. Downgrade Waves (EWK, IRE, EIRL, IRL, EWI, TI, EWP, STD)

Fitch has joined in on the European sovereign credit rating downgrades.  First it was S&P, but we might argue that this should have mostly been factored in already.  Is it a secret that the economies in Europe have been slowing and have more exposure these days?  Fitch is cutting six Eurozone sovereign ratings (on Rating Watch Negative since 16 December 2011) as follows (with ETFs and major ADRs indicated):

Belgium LT IDR downgraded to ‘AA’ from ‘AA+’; Negative Outlook; ST IDR  affirmed at ‘F1+’: iShares MSCI Belgium Index Fund (NYSE: EWK) is still up 0.4% at $11.33; 52-week range $10.23 to $15.65.

Ireland LT IDR affirmed at ‘BBB+’; Negative Outlook; ST IDR affirmed at ‘F2’:  Bank of Ireland (NYSE: IRE) down 1.6% at $6.15; 52-week range of $3.99 to $27.00 (adjusted for reverse split). MSCI Ireland Capped Investable (NYSE: EIRL) is down 1.5% at $20.17; 52-week range is $16.78 to $23.80. The Irish Investment Fund, Inc. (NYSE: IRL) is still up almost 1% at $7.22 and its 52-week range is $6.49 to $8.77.

Italy LT IDR downgraded to ‘A-‘ from ‘A+’; Negative Outlook; ST IDR downgraded to ‘F2’ from ‘F1’: iShares MSCI Italy Index Fund (NYSE: EWI) is down 0.8% at $12.92; 52-week range is $10.88 to $20.15. Telecom Italia S.P.A. (NYSE: TI) is flat at $10.33 an dthe 52-week range is $9.74 to $16.04.

Spain LT IDR downgraded ‘A’ from ‘AA-‘; Negative Outlook; ST IDR downgraded to ‘F1’ from ‘F1+’: iShares MSCI Spain Index Fund (NYSE: EWP) is still up 0.4% at $31.44 against a 52-week range of $28.53 to $45.99. Banco Santander, S.A. (NYSE: STD) is still up 0.7% at $8.16 against a 52-week range of $6.77 to $12.72.

Two more downgrades were issued:

  • Cyprus LT IDR downgraded to ‘BBB-‘ from ‘BBB’; Negative Outlook; ST IDR affirmed at ‘F3’
  • Slovenia LT IDR downgraded to ‘A’ from ‘AA-‘; Negative Outlook; ST IDR downgraded to ‘F1’ from ‘F1+’

Should this have really been a surprise?  If so, these would be performing far worse.

JON C. OGG