They are still in trouble. The twenty five major lenders and public companies located in countries that Standard & Poor's downgraded on Friday could experience downgrades themselves according to warnings from S&P. Downward revisions have already arrived in Spain as S&P downgraded the insurance company Mapfre this week. Some companies on the Spanish stock market could now be in the rating agency's scope, especially those who are rated higher than Spanish debt, which was lowered to A from AA-. Only four companies are rated above A at this time: BBVA, Santander, Enagás and Red Eléctrica.
Typically, after a country's credit rating is downgraded, companies within that country see their ratings adjusted as well. In fact, "it is a rare case when a company maintains a rating that is better than its country," remarked one of the companies listed above. Various experts are not ruling out the possibility that S&P will downgrade some of Spain's biggest companies. "After Spain?s rating was cut, it seems logical that S&P will end up dropping ratings for Spanish companies, especially those with strongest connections to national debt," said Covadonga Fernández, an analyst from Selfbank.
Fernández points to the "strong exposure to this kind of debt" as the factor that explains why the financial sector is
"one of the prime candidates for downgrades." The only Spanish banks that maintain a rating higher than Spain's are BBVA and Santander. Francisco González and his bank hold long-term debt that has an A+ credit rating according to S&P, while Emilio Botín and his bank maintain a AA- rating, which is just one level beneath the highest possible credit rating.
Still, the argument that ratings agencies, as a general rule, usually downgrade a company after the country in which that company is located receives a downgrade is not always valid. Moody's rating of lenders such as Santander, BBVA and CaixaBank is one example.
Despite the fact that Moody's lowered Spain's credit rating to A1 this past October, bonds from these three Spanish lenders remained one step higher at Aa3.
