GrahamWalker : As Standard & Poor’s downgrade Spain’s credit rating, who will come under scrutiny next?
Graham Walker analysts are apparently speculating that the next country to have its AAA sovereign debt credit rating downgraded will be the United Kingdom. Sources close to the firm said that they may already have begun divesting themselves of sterling-denominated assets including gilts and equities at an even faster rate than previously thought.
Although Graham Walker have had a “sell into strength-rating” on UK gilts and equities for more than six months, the S&P Spain downgrade together with the imposition of a “junk grade” rating on Greece’s debt and a less severe cut on Portugal’s may have prompted the firm to begin selling with conviction.
The reasons would appear to obvious given the fact that the UK’s budget deficit is fast-approaching Greek levels in percentage terms and, to date, none of the three major political parties contesting the country’s imminent general election have outlined any remotely credible plans for its reduction.
Graham Walker sources believe that S&P and the other two main ratings agencies, Moody’s and Fitch Ratings, are delaying decisions on the UK because they cannot reasonably expect the parties to release details of what would almost certainly be vote-losing spending cuts and tax hikes.
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