Last month, Fitch downgraded the debt ratings of Sony, Panasonic, and Sharp to “junk” status citing weakness in their consumer electronics and TV operations. Today’s graphic tracks the market cap, return on equity, operating income and credit rating for these three technology giants.
On Wednesday, Standard & Poor’s cut Spain’s sovereign credit rating to BBB-minus, just above junk territory, citing a deepening economic recession that is limiting the government’s policy options to arrest the slide. Today’s graphic shows the long-term sovereign debt ratings for the U.S., Japan and the euro zone.
Credit ratings agency Moody’s downgraded 15 global banks on Thursday after a months-long review. Today’s graphic is a summary of old and new long-term ratings for the bank holding companies and operating companies (including two downgraded earlier this years).
Citing “continuing disagreements among European policy makers on how to tackle the immediate market confidence crisis,” S&P threatened to cut the credit ratings of 15 countries, including Germany and France, by 1-2 notches. Today’s graphic takes a look at the current long-term sovereign debt ratings of the US, Japan, and the countries in the euro zone. Do you think S&P will go through with the downgrades, and if so, which countries?
We have a double dose of graphics to start your morning. The first provides four graphs of key economic indicators comparing Greece and the rest of the euro zone. Greece greatly under performs in all four categories. The second graphic lists the credit ratings for different countries in Europe. Notice how Greece is rated CCC, which is described as, “currently vulnerable, depends on favorable conditions to meet financial commitment.”
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The looming US debt situation could be harmful to markets, but Value investors may find it beneficial. With less than a week until the debt ceiling deadline, Washington remains divided on a plan to cut costs and raise the debt limit. Though many believe they eventually will prevent a default next Tuesday, the downgrade of the United States’ AAA credit rating is almost certain, according to a Reuters poll of economists. A lower credit rating translates to higher interest rates that would rattle an already fragile economy recovering from recession. Investors’ moving out of equities and into other assets will drive down prices of strong companies, leaving Value investors with potential bargains. These discounts do not guarantee returns, though, as companies will have to adjust to the more expensive borrowing.
As the US debt situation remains unresolved, markets are starting to turn south. Whether there’s a downgrade or, even worse, default, investors could suffer from sharp equity sells. However, if Value investors stick to their contrarian nature, there could be buying opportunities.
The following report provides an overview of the top Value investors and their holdings: