S&P puts ratings on 15 Eurozone countries on CreditWatch
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Standard & Poor's Ratings Services today placed its long-term sovereign ratings on 15 members of the European Economic and Monetary Union, including "triple-A" ones like Germany, France and Luxembourg, on CreditWatch with negative implications.
In a statement, the rating company said this action follows the deepening crisis in the euro zone.
It would decide whether to downgrade or maintain the credit ratings after the European Summit during Dec 8-9. Normally, the CreditWatch is resolved within 90 days.
In a bad case, the ratings for some economies like Germany will not be lowered by more than one notch. Maximum cut of two notches is expected for some others.
In the 17-member zone, Cyprus rating is already on CreditWatch. The ratings on Greece have not been placed on CreditWatch.
"Today's CreditWatch placements are prompted by our belief that systemic stresses in the eurozone have risen in recent weeks to the extent that they now put downward pressure on the credit standing of the eurozone as a whole," S&P said.
Five factors for the systemic stress are highlighted.
(1) Tightening credit conditions across the eurozone;
(2) Markedly higher risk premiums on a growing number of eurozone sovereigns, including some that are currently rated 'AAA';
(3) Continuing disagreements among European policy makers on how to tackle the immediate market confidence crisis and, longer term, how to ensure greater economic, financial, and fiscal convergence among eurozone members;
(4) High levels of government and household indebtedness across a large area of the eurozone; and
(5) The rising risk of economic recession in the eurozone as a whole in 2012. Currently, we expect output to decline next year in countries such as Spain, Portugal and Greece, but we now assign a 40 per cent probability of a fall in output for the eurozone as a whole.
