Surge In Spain Problem Loans Is Credit Negative - Moody's - WSJ.com: "rise in Spain's problem loans to an all-time high, as recently reported by the Bank of Spain, is a factor endangering the credit rating of the country's financial institutions, ratings agency Moody's said Monday.
Problem loans in Spain's banking system reached a fresh high of EUR102.5 billion as of August, according to central bank data, also hitting the highest percentage of overall loans since 1996, at 5.6%, Moody's said in a research note.
'The performance of the commercial real estate sector has been the main driver of overall asset quality deterioration,' Moody's added, noting that the pace of deterioration surged in 2009 but has slowed this year.
Still, asset quality deterioration in Spain's banking system is likely to continue this year and next, Moody's said, due to oversupply in the property market, the impact of the real estate crisis on the larger economy, and high unemployment levels putting pressure on household credit quality"
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