9 Countries in Euro Zone Downgraded by S&P
Standard & Poor’s stripped France of its AAA credit rating, also cutting eight others in the process. Portugal’s credit rating fell to junk status and Italy’s was lowered by two steps, as S&P sent a signal that Europe’s sovereign debt crisis was far from over.
In announcing the changes, which have further weakened the effort of the euro zone’s bailout fund, Standard & Poor’s said: “Today’s rating actions are primarily driven by our assessment that the policy initiatives that have been taken by European policy makers in recent weeks may be insufficient to fully address ongoing systemic stresses in the euro zone.”
Responding to the news, France’s Finance Minister François Baroin said: “It’s not good news,” on France television, adding that it is also “not a catastrophe.”
Last December, S&P had warned it was conducting a review of the credit ratings of more than a dozen EU countries including Germany and the Netherlands, which have triple-A ratings. Those two countries were not included in today’s announcement and their credit ratings remained unchanged.
Spain (now A) and Cyprus (BB+) saw their ratings cut by two steps, and Austria, Malta, Slovenia, and Slovakia were each lowered by one. The ratings of Belgium (AA), Estonia (AA-), Finland (AAA), Ireland (BBB+), and Luxembourg (AAA) remained unchanged, as was Greece’s (CC), which was not cited by S&P in its review. Italy’s rating was lowered to BBB+ and Portugal’s to BB. The United States’ rating of AAA was lowered by S&P last summer, in an move unrelated to the euro crisis.
In response to the announcement, the euro hit a new 16-month low in trading against the U.S. dollar.