According to the French agency,
Coface, the French public export guarantee agency, indicated today that it has placed Spain's rating under negative watch due to the "risk of contagion from the real estate crisis similar" to that of the United States and the United Kingdom.
In a statement, Coface indicated that it is keeping the United States and Great Britain under negative watch, a measure it took last April and July, respectively, following the subprime mortgage crisis in the US, and announced that Spain is the third "major industrialized country" to which it applies this rating.
"Spain shares with the United States and the United Kingdom the dangerous cocktail of housing bubble and household over-indebtedness," explained Coface's chief economist, Yves Zlotowski, in the note.
In explaining that Spain is "vulnerable to a risk of contagion from the US housing crisis", Coface points out that the household debt ratio (130 percent) reaches proportions comparable to those of the United Kingdom and the United States (163 and 138%).
And he believes that investments by companies, which are also "highly indebted", will also suffer from the tightening of credit.
According to Coface, the growth of the Spanish economy should slow to 2,9% in 2008, compared to 3,8% this year, due in particular to the fall in residential investment - which contributes "significantly" to growth and employment - and the slowdown in household consumption, which would fall from 3,2% to 2,7%.
It notes that payment behaviors, which have been "satisfactory" until now, are at risk of deteriorating.
Small and medium-sized enterprises linked to housing markets (real estate agencies, manufacturers and distributors of materials and equipment for the home) are "often indebted" and therefore highly exposed to the slowdown in growth, it indicates.
On the other hand, with regard to Eastern Europe, Coface announced that it is placing Romania's credit rating under negative watch, a country particularly affected by the financial crisis that erupted last summer in the US.
The Romanian currency, which has fallen significantly, is the most fragile among emerging countries and makes the country vulnerable to a crisis of confidence, Coface says.
It warns that the progression of private sector debt in Romania raises fears of a deterioration in companies' payment behavior.
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