Talk of more European downgrades on the assumption that ‘senior’ bondholders in the periphery are actually second in line after the ECB.
“If people are more subordinated than was thought, then you’d expect some rating action,” said Riddell. “The ratings agencies have been miles behind the market during this debt crisis. They’ve been very slow to downgrade the euro zone sovereigns, so now that sovereigns are becoming subordinated, we should eventually see some action on the back of this.”
They also note that Portuguese CDS are the world’s most expensive after Greece. Topping Pakistan, Argentina, Ukraine and Venezuela. If anyone tells you the European crisis is over, remind them of that.
