If two weeks ago, the solvency of the sovereign debt, this Friday has been the Moody’s credit rating agency that has given its support, uploading a step the rating of ‘Baa1 ′ A’ A3 ′ for its economic strength. The new note implies an improvement in the investment grade, moving from “satisfactory” to “good.”
The agency recognizes the good rhythm of the Spanish economy, with growth above the European average – the Organization for Economic Cooperation and Development (OECD), and— and the creation of employment. In fact, the positive exam is a message of trust towards the Spanish economy for the country’s ability to deal with its financial obligations and reinforces the capacity of Spain to finance in the markets in better conditions.
Moody’s is the qualification agency among the main ones that gives the lowest note to the Spanish debt, which since 2018 placed it in ‘Baa1 ′, although it maintained a positive perspective. Now it has passed to stable. In Febre rating From Spain, although it has raised its note by putting “a more balanced economic growth model, improvements in the labor market and a strengthening of the banking sector, which increases the resilience of the economy”.
S&P also puts repairs to this measure, understanding that it could generate a “moral risk” by decreasing incentives for communities to put a brake on debt growth. However, the note that gave Spain on September 12 as a long -term sovereign issuer exceeded expectations, since it raised the qualification from ‘A’ to ‘to+’, with a stable perspective, being the first rise since 2019.
For Moody’s, employment has been one of the most valued issues. In his opinion, the labor offer will be increased due to positive net migratory flows and “incentives to prolong working life,” he highlights in a press release. It also emphasizes that economic growth is driven by the “competitive advantage” of Spain in the production of renewable energy and macroeconomic stability.
Despite the improvement of the qualification, the agency of rating He warns of challenges such as the aging of the Spanish population or the weakening of Spanish legislative and executive institutions during the last decade, the latter that has led him to leave the perspective of evolution of his qualification in stable.
“The stable perspective also balances a combination of strengths and challenges at the institutional level. The strength of the institutions and governance of Spain is solid compared to that of its world homologues. However, in our opinion, the strength of legislative and executive institutions has weakened in the last decade, since institutions have difficulty operating in the midst of greater political fragmentation. This political fragmentation has caused a significant increase in Decrees that emanate directly from the Executive and have generated a political uncertainty that may be braking the investment, ”says the document.
Faced with population aging that Moody’s sees as a challenge, the firm indicates that one of the challenges facing the country is the pension system. Moody’s puts in value that the successive reforms of pensions that have raised the average retirement age, both through changes in the legal retirement age and through a system of bonus-malus that encourages the extension of working life and penalizes early retirements.
