Europe chem stocks down on Moody’s downgrade of Spain's banks

18 May 2012 10:36  [Source: ICIS news]

LONDON (ICIS)--European chemical stocks were down on Friday, in line with financial markets, after rating's agency Moody's downgraded 16 of Spain’s banks due to the country’s struggling economy.

Investor confidence was hit by the downgrades, which included Spain’s major banks Santander and BBVA.

“We downgraded 16 Spanish banks as well as Santander UK Plc, the UK-domiciled subsidiary of Banco Santander SA, as part of a review for downgrade of various European banks initiated on 15 February 2012,” Moody’s said.

The country has struggled to cut its debt, while the government’s ability to support lenders has caused concerns for investors.  

At 08:13 GMT, the UK’s FTSE 100 was down by 0.61%, Germany’s DAX had fallen by 0.56%, and the CAC 40 in France was down by 1.02%.

With European indices trading lower, the Dow Jones Euro Stoxx Chemicals index was down by 0.92%, as shares in many of Europe’s major chemical companies fell from the previous close.

Petrochemical major BASF’s shares had fallen by 0.60%, while fellow Germany-based chemical company Bayer’s shares were trading down by 0.51%.

Shares in Switzerland’s Syngenta were down by 3.06%, while fellow Switzerland-based company Clariant’s shares were trading down by 2.02% from the previous close. Norway-based fertilizer producer Yara International's shares were trading down by 2.80% on the previous close.

Moody’s said that seven of the banks downgraded remain on review for further downgrading and said it will be looking at other European banks over the coming months.

“We already took action on 26 Italian banks earlier this week and seven Portuguese banks in March. We expect to conclude the remaining reviews on other European banking systems by the end of June,” the agency said.

“This wider review is driven by the difficult European operating environment caused by the prolonged euro area crisis, and the deteriorating creditworthiness of certain euroarea sovereigns,” it added.

Meanwhile, fellow rating’s agency Fitch downgraded Greece's debt rating due to the risk that the country may not be able to sustain its membership of the economic monetary union (EMU) after it was unable to form a government this week.

“An exit of Greece from EMU would be probable if the 17 June new general elections fail to produce a government with a mandate to continue with the EU-IMF programme of fiscal austerity and structural reform,” said Fitch.

Read Paul Hodges’ Chemicals and the Economy Blog

By: Leigh Stringer
+44 208 652 3214

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