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Tight Times; Moody’s Moves

  • February 14th, 2012
  • Posted by EUEditor

eu-money-symbol-coins.jpgAmid the fighting in Greece over hard times and hard decisions on the budget, and as European Finance Ministers readied for their latest deliberations on debt (see EUAustralia Online, “Athens Pain”, 14.2.12) another credit agency has set up an amber light on investing in Europe.   

Reflecting the tight conditions in European finance, the American credit ratings agency Moody’s on Monday downgraded the outlook for three “triple-A” European Union member states – France, The United Kingdom and Austria – and reduced the ratings outright for six others:
Italy from A2 to A3, still classed as “investment quality”; Spain from A1 to A3; Portugal Ba2 to Ba3; Slovakia and Slovenia both A1 to A2, and Malta A2 to A3.

These adjustments were not as steep as ones made by another agency Standard and Poor’s, last month. The third company issuing ratings, Fitch, also made down-grades last month, against Belgium, Cyprus, Italy, Slovenia and Spain.

This time, they did not alter the triple-A ratings held by Germany and by the European Union stabiisation fund set up to provide credit guarantees for member state governments under pressure.

The financial advisory firms, if criticised over gross errors, or accused of political motives for their ratings, research credit worthiness knowingly, so that, said the Associated Press this week, “government debt ratings can play a major role in countries’ borrowing costs because a lower rating often means countries must pay higher interest rates on their bonds to attract investors.”


Reference

Washington Post (AP), Washington, “Asian stock markets mixed after Moody’s downgrades credit ratings of Italy, Spain”, 14.2.12.
http://www.washingtonpost.com/business/markets/asian-stock-markets-fall-after-moodys-downgrades-credit-ratings-of-italy-spain/2012/02/13/gIQAzPsDCR_story.html, (14.2.12).

Rodrigo Campos,”Moody’s warns UK, France, Austria over AAA rating; cuts others”, Reuters, London, 13.2.12.
http://www.reuters.com/article/2012/02/14/ratings-europe-idUSL2E8DDHZ420120214,(14.2.12).

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