Links: Sovereign and Muni Downgrades (June 14, 2012)

S&P says recovery in Spain implies a 25% fall in house prices (Reuters)

Egan-Jones downgrades France to BBB+ (BloombergBusinessweek)(Sean Egan on CNBC's Fast Money)

Moody's downgrades Dutch banking groups; most outlooks now stable (Moody's)

Moody's Slashes California TABs to Junk (BondBuyer)

Moody's downgrades to Ba1 all California TABs rated Baa3 or above, reflecting sharply increased uncertainty of continued, timely cash-flow for debt service payments; all TAB ratings remain on review for possible withdrawal due to insufficient information (Moody's)

Moody's cuts Detroit ratings deeper into junk (Reuters)

Stockton Deadline Nears, Moody’s Warns of Defaults (BondBuyer)

ECB Tells Court Releasing Greek Swap Files Would Inflame Markets (Bloomberg)

Moody's downgrades Banque et Caisse d'Epargne de l'Etat LT ratings to Aa1 (Moody's)

Italian sovereign debt exposure was 53% of the bank's Tier 1 capital (EUR980 million / 1.8 billion).

"As a consequence of its historical excess of funding over its lending activities, the bank has a large liquidity position in the form of a sizeable investment portfolio, which exhibits material credit risk concentrations. This portfolio remains highly concentrated on the European banking and sovereign sectors and is significant relative to BCEE's capitalisation. In the context of the current worsening euro area debt crisis, Moody's believes that BCEE's investment portfolio is more vulnerable than before. Despite the sizeable reduction of its exposures to Italian government bonds -- net exposure of EUR980 million as per unaudited Q1 2012 financials, compared with EUR2.3 billion according to audited FYE 2010 financials -- this exposure remains significant, representing 53% of the bank's Tier 1 capital (EUR1.8 billion as per unaudited Q1 2012 financials). Similarly, the ten largest senior unsecured banking exposures represented EUR3.7 billion at end-March, equivalent to 200% of Tier 1 capital."
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