Comments on: Sovereign ratings aren’t very important http://blogs.reuters.com/felix-salmon/2012/06/19/sovereign-ratings-arent-very-important/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: CDN_Rebel http://blogs.reuters.com/felix-salmon/2012/06/19/sovereign-ratings-arent-very-important/comment-page-1/#comment-40349 Tue, 19 Jun 2012 20:04:11 +0000 http://blogs.reuters.com/felix-salmon/?p=15206#comment-40349 Sovereign downgrades only effect bank balance sheet as they have (semi)strict rule on capital holdings. The downgrade becomes costly when banks have to dump one sovereign for another otherwise their capital formulas are out of whack and regulators/analysts bark at them. As to the rest of the market, ya, ratings agencies REACT to price moves or political instability, not the other way around – though a downgrade can exacerbate a condition that was already deteriorating.

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By: MattL http://blogs.reuters.com/felix-salmon/2012/06/19/sovereign-ratings-arent-very-important/comment-page-1/#comment-40346 Tue, 19 Jun 2012 19:49:44 +0000 http://blogs.reuters.com/felix-salmon/?p=15206#comment-40346 Weirdly the IMF report is linked in the article on the Bloomberg terminal, but not in the web version. (Also the terminal’s title is “Data Prove Ratings Fail as Flipped Coin Enslaves Nations,” even more Strange-Bloomberg-Headlines than the web’s “Austerity Doesn’t Pay As Debt Markets Ignore Rating Cuts.”)

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