S&P cuts credit rating on eurozone's bailout facility EFSF

Tuesday, 17 January 2012 08:45

US credit rating agency Standard & Poor's has downgraded the credit rating of the European Financial Stability Facility (EFSF) from AAA to AA+.

The organisation said the cut was inevitable following a series of reductions to the ratings of a number of eurozone countries last week, with Germany now the only country to maintain its AAA status.

This means that there are now not enough AAA-rated guarantors to allow the fund to keep its top-class rank.

France, Italy and Austria were among the countries that saw their credit rating go down, with S&P having warned in early December 2011 that an EFSF downgrade would be the result of any such adjustments.

The downgrade of France's status is viewed as making it harder and more expensive for the eurozone to bail out other nation states that are in financial trouble.

"EFSF has sufficient means to fulfill its commitments under current and potential future adjustment programmes until the [European Stability Mechanism] becomes operational in July 2012," insisted chief executive of the organisation Klaus Regling in a statement.

S&P said the AAA rating could be restored if the fund obtains additional guarantees, or if it was endowed with less money that could be better guaranteed.

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