Sovereign Presentation_2012-01

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European Sovereign Ratings Outlook
Frank Gill, Senior Director, European Sovereign Ratings
London, January 2012
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Copyright © 2011 Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc. All rights reserved.
Global Sovereign FC Rating Upgrades, Downgrades, And Outlooks
Source: Standard and Poor’s
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2.
Selected European FC Rating And Outlook Actions
Source: Standard & Poor’s
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3.
FC Rating Changes and Affirmations Taken on the 13th of January 2012
FC Ratings
Outlooks
ST Ratings
Prior Ratings
Notches Difference
Germany
AAA
Stable
A-1+
AAA
0
Netherlands
AAA
Negative
A-1+
AAA
0
Finland
AAA
Negative
A-1+
AAA
0
Luxembourg
AAA
Negative
A-1+
AAA
0
France
AA+
Negative
A-1+
AAA
-1
Austria
AA+
Negative
A-1+
AAA
-1
Belgium
AA
Negative
A-1+
AA
0
Estonia
AA-
Negative
A-1+
AA-
0
Slovenia
A+
Negative
A-1
AA-
-1
Slovakia
A
Stable
A-1
A+
-1
Spain
A
Negative
A-1
AA-
-2
Malta
A-
Negative
A-2
A
-1
Italy
BBB+
Negative
A-2
A
-2
Ireland
BBB+
Negative
A-2
BBB+
0
Cyprus
BB+
Negative
B
BBB
-2
Portugal
BB
Negative
B
BBB-
-2
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4.
EMU-15 Sovereign Ratings Peaked Over 5 Years Ago
Source: Standard & Poor’s
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5.
Selected European Sovereign Spreads
Source: Bloomberg
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6.
Eurozone Central Government Debt Average Weighted Yield Is Rising
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7.
Composition of Real GDP Growth by Country
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8.
Composition of Real GDP Growth by Country
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9.
Evolution Of Domestic Credit Growth (%, YoY)
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10.
Household Saving Rate
Source: Eurostat
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11.
Prospects For Export-Led Growth Differ In Our View
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12.
We Believe Fiscal Deficits Will Come Down Only Gradually
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13.
Net General Government Debt and Interest Burden
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14.
Net International Investment Position (% of GDP)
average 2000-10
2012 f.
2014 f.
110
90
70
50
30
10
-10
-30
-50
-70
-90
-110
-130
-150
Source: Standard & Poor‘s.
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15.
Greece
Portugal
Ireland
Spain
Estonia
Slovakia
Slovenia
Italy
Austria
France
Malta
Finland
Cyprus
Germany
Netherlands
Belgium
Luxembourg
-170
Current Account Balance (% GDP)
10
average 2000-10
2012 f.
2014 f.
8
6
4
2
0
-2
-4
-6
-8
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16.
Cyprus
Greece
Portugal
Malta
Spain
Italy
Slovakia
France
Slovenia
Finland
Belgium
Estonia
Ireland
Austria
Luxembourg
Germany
Netherlands
-10
Current Account Balances Across Selected EMU Sovereigns
Current Account Balance
(In Billions of Euros)
200
150
Billions of Euros
Surplus
100
Portugal
Ireland
50
Greece
Spain
0
Italy
Germany
-50
-100
-150
Deficit
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: National Sources & Standard & Poor’s
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17.
Nominal G&S Exports/German G&S Exports
France
U.K.
Netherlands
70%
Spain
Belgium
Italy
60%
50%
40%
30%
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18.
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
20%
Narrow Net External Debt/Current Account Receipts (%)
2011
2013
average 2000-2010
For Greece average is taken for 2005-2010
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19.
Malta
Slovakia
Belgium
Estonia
Cyprus
Slovenia
Germany
Netherlands
Austria
Finland
Italy
France
Ireland
Portugal
Spain
Luxembourg
Greece
650
550
450
350
250
150
50
-50
-150
Standard & Poor’s Rebalancing Progress Indicator
Estonia Ireland Spain Portugal Greece
Change in CAD/GDP
12.8 6.9 6.6 5.1 5.7
Change in unit labour costs
-6.7 -11.5 -1.9 0.4 -0.6
Nominal exports over 2008, % change 35.3 14.6 11.8 4.3 -7.5
RPI 2011f vs 2008
18.3 11.0 6.8 3.0 -0.4
RPI 2010 vs 2008
6.5 6.6 0.8 -1.1 -4.3
Change in EFI from 2010-2011f
11.8 4.4 5.9 4.0 3.9
GDP Q3 2011, %Y/Y*
7.9 2.3 0.8 -1.7 -5.2
*Q2 2011 data for Ireland
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20.
Rebalancing Progress Indicator (RPI for 2010 and 2011f versus 2008)
Rebalancing Progress Indicator (RPI for 2010 and 2011f versus 2008)
Nominal NIA exports over 2008, % change
Change in unit labour costs
19.0
Change in CAB/GDP
2010 vs 2008
14.0
2011f vs 2008
9.0
4.0
-1.0
-6.0
7.9%
2.3%
0.8%
-1.7%
-5.2%
Q3 GDP %, y/y data point is below country name
Estonia
Ireland
Spain
Portugal
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21.
Greece
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