CAM Downgraded By Moody's

Reuters are reporting that Moody's yesterday downgraded five more Spanish savings banks because of their exposure to real estate and construction. Ratings were cut (no details provided yet) on the listed bank Caja de Ahorros del Mediterraneo (CAM), as well as on unlisted Caixa Cataluna, Caixa Tarragona, Caixa Terrasa and Bancaja.

In its statement Moody said it continued to believe Spain would undergo an orderly correction in its housing market at the end of the housing boom. However, Moody's did say the correction, coupled with the global credit crunch "is translating into a more severe downturn in the credit cycle for Spain's banking system than initially anticipated".

"The request by Martinsa-Fadesa (Spain's largest real estate developer) to be placed under court-supervised administration has once more highlighted the significant difficulties this sector is going through as well as the vulnerability of Spanish banks to the underperformance of the real estate developers and the risks arising from these exposures," said Moody.