The ratings agencies are at it again. We have noted that the PIIGS will continue to see downgrades and that is what we are seeing today. Fitch downgraded both Italy and Spain. Shares of iShares MSCI Italy Index (NYSE: EWI) are still up 0.4% at $12.58 on the day but shares were up around $12.80 earlier today. Shares of iShares MSCI Spain Index (NYSE: EWP) are down only $0.02 at $33.65 but shares were above $34.00 earlier this morning.
Italy was cut to “A+” from “AA-” today noting that the crisis is a significant financial and economic shock for Italy. It also notes that Italy has been hesitant to respond and it has eroded confidence.
Spain was downgraded to “AA-” with a negative outlook due to risks of fiscal consolidation efforts. It noted that it could go down to the “A-” range if the FROB costs are more than expected.
One day will hopefully come that U.S. investors do not have to worry about headline risks coming out of Europe and the lands of the PIIGS. That day is just not yet here.
JON C. OGG
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