EUROZONE/ GREECE: Fitch Downgrades Greece 3 Levels; Euro Drops On Spanish Elections.

BLOOMBERG/ M. Petrakis

      The euro is falling again..nearing the $1.40 level again...after Fitch Rating downgraded Greece’s credit rating...by three levels...to B+ from BB+...an astounding 4x levels below investment grade.
     It now equals the debt ratings for...Venezuela, Georgia and Sri Lanka.
     Fitch also warned that even a voluntary extension of its bond maturities...so-called "reprofiling" by the ECB...would be considered a default.
      Greece’s two-year bonds now yield...more than 25%.
     Also pushing down the euro were fears of change in the upcoming Spanish elections where the Socialist government may lose to the Popular Party.
     Analysts believe elections might uncover unknown financial problems there...unrecorded "hidden debts"...from governmental slow pay policies...up to...$26 Bn euros!
    New comments from Jens Weidmann, a member of the ECB Governing Council, also spooked the market. 
    He said it would be “impossible” for the central bank to take extended-maturity Greek bonds in its refinancing operations.
    The WSJ today reported that Greek banks borrowed...$125 Bn usd...from the ECB in March...in 3 month loans...using only Greek bonds as collateral.
     “It’s Greece, it’s the Spanish elections,” said an HSBC analyst. “The notion that banks wouldn’t be able to use Greek paper as collateral should there be an extension of the terms of sovereign debt is another example of ECB reticence to allow Greece, the rest of Europe or market participants to think there will be some type of restructuring.”

PORTUGAL: Fitch Ratings Sacked By Bank After Downgrade.

GUARDIAN/
     Fitch Ratings has been canned by Banco Espírito Santo, one of Portugal's biggest banks, after BES's credit rating was downgraded from A to BBB+.
     The bank insists that Fitch's downgrade did "not reflect the financial soundness of the bank".
    It was BES's second downgrade since July. The bank claims that there was "no valid justification for a three-notches downgrade in less than four months"

MEXICO: Bonds Lowered To Just Above "Junk" By S&P.

LATIMES/
Standard & Poor's lowered Mexico's foreign-currency debt rating to BBB, one grade above "junk" status, from BBB-plus, following a similar downgrade by Fitch Ratings on Nov. 23. Mexico raised taxes recently to boost non-oil revenue but S&P said the measures didn't go far enough.

Petrobras Sub-Salt Financing May Negatively Affect Bond Ratings.

REUTERS/
Fitch Ratings says that Petrobras may face lower debt ratings by borrowing some $400 billion to finance development costs for the offshore subsalt fields.
Petrobras plans to almost double oil production by 2020 by developing deep-sea subsalt fields off Brasil's coast that may hold some 50 billion barrels of oil.

Fitch Ratings Downgrades Central Europe.

BLOOMBERG/
Poland, Hungary and the Czech Republic will suffer deteriorating state finances even as the global crisis subsides, pushing up debt levels and raising the risk of ratings downgrades, Fitch Ratings said.