Ratings agencies wary of EU summit impact on debtDecember 13th, 2011 - 1:43 pm ICT by IANS
New York, Dec 13 (IANS) Three major ratings agencies said Monday that last week’s EU summit was not enough to ease pressure on eurozone sovereign debt since no decisive initiatives were adopted, and warned to review the region’s credit.
“The communique issued by European policy-makers after the recent euro area summit offers few new measures and, therefore, does not change our analysis of the rising threat to the cohesion of the euro area and the further shocks to which it and the wider EU remain prone,” Moody’s Investors Service said in a release.
The ratings agency said it planned to complete its re-evaluation of all EU countries during the first quarter of 2012, reported Xinhua.
“As we announced in November, unless credit market conditions stabilize in the near future, our ratings of all EU sovereigns will need to be revisited.”
Moody’s was echoed by its rival Fitch, which agreed that “the lack of a comprehensive solution has increased short-term pressure on eurozone sovereign credit profiles and ratings”.
Fitch appreciated the positive developments of the latest EU summit, including framework for a more viable eurozone and ultimately greater fiscal union, an extra 200-billion-euro funding for the IMF and the forward-bring of European Stability Mechanism, but it saw no “comprehensive solution” to the current crisis and predicted “a significant economic downturn across the region” in the short term.
Meanwhile, Jean-Michel Six, chief economist of Standard & Poor’s, also said EU summit agreement was a significant step forward, but not enough.
Last week, S&P; put 15 eurozone countries under credit watch for a potential downgrade, saying it expected “review of eurozone sovereign ratings as soon as possible following the EU summit”, and “depending on the score changes, if any, that our rating committees agree are appropriate for each sovereign, we believe that ratings could be lowered by up to one notch for Austria, Belgium, Finland, Germany, the Netherlands, and Luxembourg, and by up to two notches for the other governments”.
- Germany calls for European rating agencies after S&P; downgrade - Jan 16, 2012
- Fitch downgrades ratings of five EU nations - Jan 28, 2012
- Fitch downgrades Spain's two major banks - Jun 12, 2012
- S&P; places EU, big European banks on negative watch - Dec 08, 2011
- US stocks pull back as European optimism fades - Dec 13, 2011
- US stocks drop for second straight day (Lead) - Dec 14, 2011
- Greek referendum plan plunges financial markets into frenzy - Nov 02, 2011
- Moody's downgrades Spain's debt rating - Mar 11, 2011
- S&P; downgrades Hungary credit rating to junk - Dec 22, 2011
- EU criticizes S&P;'s eurozone countries rating cut - Jan 14, 2012
- Moody's downgrades Eurozone bailout fund credit outlook - Jul 25, 2012
- Greece rejects Moody's rating of its bonds - Jun 15, 2010
- Fitch downgrades Spain's four largest banks - Feb 14, 2012
- S&P; upgrades South Korea's sovereign rating - Sep 14, 2012
- Slovakian lawmakers reject eurozone bailout fund's expansion - Oct 12, 2011
Tags: chief economist, cohesion, comprehensive solution, credit profiles, economic downturn, eu countries, european stability, eurozone countries, extra 200, finla, imf, investors service, jean michel, new york dec, score changes, sovereign debt, sovereign ratings, sovereigns, summit agreement, xinhua