Greece, the not-so-expected impacts

http://ftalphaville.ft.com/blog/2009/12/09/87871/greece-the-not-so-expected-impacts/

Posted by Tracy Alloway on Dec 09 09:05.

While Greek banks are the obvious losers in Fitch’s decision to downgrade Greece to BBB+ on Tuesday, there are some less obvious impacts.
For instance — Belgian insurance subsidiaries:
FITCH AFFIRMS AG INSURANCE AND FORTIS HOLDING COMPANIES;OUTLOOK REVISED TO NEGATIVEFitch Ratings-London-08 December 2009: Fitch Ratings has today affirmed AG Insurance’s Insurer Financial Strength (IFS) rating at ‘A+’ and Long-term Issuer Default Rating (IDR) at ‘A’. Fitch has also affirmed the Long- and Short-term IDRs of the five Fortis holding companies: Fortis SA/NV, Fortis N.V., Fortis Brussels, Fortis Utrecht and Fortis Insurance NV., at ‘BBB+’ and ‘F2′ respectively. The Outlooks on the IFS ratings and on all the Long-term IDRs are revised to Negative from Stable. A full rating breakdown is provided at the end of this comment.Milleniumbcp-Fortis operating entities and Fortis Insurance Company (Asia) Ltd ratings are unaffected by today’s rating actions.The change in Outlook to Negative reflects the concentration risk of AG Insurance’s investment portfolio to certain Euro-zone sovereign issuers, particularly Greece, whose sovereign IDR was downgraded by Fitch to ‘BBB+’ from ‘A-’ today (for further information, please see the 8 December, 2009 comment, entitled ‘Fitch downgrades Greece to ‘BBB+’; Outlook Negative’, which is available at www.fitchratings.com.). However, the agency understands that the company’s management will closely monitor its exposure to Greece . . .
And Italian property companies. Via JP Morgan’s latest European property forecasts:
The last key theme for 2010 is potential sovereign credit risk, in our view. In the next chart we multiplied the CDS spread for every country with the companies’ country mix in order to come up with an overall credit risk estimate: [Greek property developer] Babis Vovos and [Immobiliare Grande Distribuzio SA] are most exposed, while the market believes that the Germans have the least potential sovereign credit risk.