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S&P ratings warning to top euro nations


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Financial Times:

Standard & Poor’s has warned Germany and the five other triple A members of the eurozone that they risk having their top-notch ratings downgraded as a result of deepening economic and political turmoil in the single currency bloc.

The US rating agency said late on Monday that Germany, France, the Netherlands, Austria, Finland and Luxembourg were all being placed on “creditwatch negative”, indicating there is a 50 per cent chance of a downgrade within 90 days.

A total of 15 countries in the EU were placed on watch with negative implications by S&P, and the agency said: “We expect to conclude our review of eurozone sovereign ratings as soon as possible following the EU summit scheduled for [December] 8 and 9.”

It warned all of the six triple A rated governments that their ratings could be lowered to AA+ if the creditwatch review failed to convince its experts. Markets have been braced for a potential downgrade of France, but few expected Germany’s top rating to be called into question.

With regard to Germany, S&P said it was worried about “the potential impact ... of what we view as deepening political, financial and monetary problems with the European economic and monetary union.”

The agency is acting as eurozone governments make further progress towards a comprehensive deal to contain the region’s sovereign debate crisis ahead of a crucial EU summit on December 9. Berlin and Paris want the eurozone to sign up to tougher fiscal rules to calm investors’ worries.

Will the last one to leave the Eurozone please turn out the lights...
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