ECONOMY

In Brief

Moody’s cuts Spain’s credit rating to Aa1 Spain’s top credit rating was cut one notch by Moody’s Investors Service, which cited a «weak» economic outlook and doubts that the nation will reach deficit-reduction targets. The ratings company lowered Spain to Aa1 from Aaa with a stable outlook, it said yesterday in a statement. Spain lost its top grade at Fitch Ratings in May and at Standard & Poor’s in January 2009. Bonds rallied as some investors anticipated a two-grade cut. Moody’s downgraded Greece by four notches in June and Portugal by two in July. «It’s a relief, as the market was pricing the worst possible outcome,» said Gianluca Salford, a fixed-income strategist at JPMorgan Chase Bank in London. «When you look at how Moody’s is treating the other peripherals, a one-notch cut was the most realistic option.» Spanish Deputy Finance Minister Jose Manuel Campa said in a telephone interview yesterday the cut was based on «overly pessimistic» growth estimates. Finance Minister Elena Salgado presented the most austere budget in three decades to Parliament yesterday. The plan includes a reduction in public wages, higher taxes and a pensions freeze. (Bloomberg) BSTDB upgraded on resilience to downturn The Black Sea Trade and Development Bank (BSTDB) said yesterday it was upgraded by ratings agency Moody’s due to its resilience to the downturn in the region and a share capital boost. It was upgraded to A3 from Baa1 with a stable outlook. «The credit rating agency said that the main reason for BSTDB’s upgrade is the resilience of the bank’s asset quality, liquidity and profitability despite the very difficult environment in the Black Sea region during the global crisis,» Thessalonki-based BSTDB said in a statement. BSTDB is an international financial institution established by Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Turkey and Ukraine. Pipeline talks Shareholders in rival European pipeline projects the Trans-Adriatic Pipeline (TAP) and the Interconnector Turkey-Greece-Italy (ITGI) are in talks about cooperation, industry sources close to TAP said yesterday. Both pipelines aim to deliver gas to Europe from the second phase of production at Azerbaijan’s Shah Deniz gas field to cut the continent’s dependence on Russian gas. «Shareholders have been in communication with each other, though talks are still at an early stage and nothing has been decided yet,» said one of the sources. Gas demand has plunged in the global economic crisis, and the International Energy Agency has warned that Europe’s debt crisis might push demand back to 1999 levels, raising doubt about the future of numerous European pipeline projects. TAP, which aims to carry 10 billion cubic meters of gas as well as the ITGI, which plans a capacity of between 8-13 billion cubic meters (bcm), will be competing for market share with the planned 31 bcm Nabucco and Russia’s huge South Stream pipeline project. TAP managing director Kjetil Tungland said previously the pipeline, owned by Germany’s E.ON Ruhrgas, Norway’s Statoil and Swiss EGL, is open for cooperation with ITGI. The latter’s shareholders are Edison, Greek Public Gas Corporation DEPA and Turkish state pipeline Botas. «As you saw, E.ON joined TAP this spring and our shareholders continue to be open to new companies to join as additional shareholders,» said Tungland late on Wednesday on the sidelines of a conference. TAP is estimated to cost $1.5 billion. The ITGI has a forecast price tag of up to $3.4 billion. (Reuters) Cyprus checks The validity period of checks issued in Cyprus will be reduced to three months from six, effective from March 1, 2011, the Central Bank of Cyprus said. The decision was made by the Cyprus Clearing House for Checks, a mechanism for commercial banks that operates under Central Bank supervision, the Nicosia-based Central Bank said in a statement on its website. The move will apply to checks issued by the Cypriot government as of August 1 next year. The value of bounced checks in Cyprus rose 65 percent in 2009 to 9.3 million euros ($12.7 million), according to the Central Bank. (Bloomberg)