World

Moody’s lowers outlook on EU’s bailout fund

PTI Washington | Updated on March 12, 2018 Published on July 25, 2012

Moody’s said its decision to lower the outlook on the European Financial Stability Facility reflected the changes in outlooks on Germany, the Netherlands and Luxembourg

Ratings agency Moody’s has lowered the outlook on the EU’s bailout fund from stable to negative, after threatening the triple-A credit ratings of three of the Euro Zone’s major guarantors.

Moody’s said its decision to lower the outlook on the European Financial Stability Facility (EFSF) reflected the changes in outlooks on Germany, the Netherlands and Luxembourg. But it maintained the EFSF’s triple-A rating.

The ratings agency said that although outlook changes for those countries “imply an increased likelihood that the EFSF might be downgraded over the next 12 to 18 months,” it had left its rating unchanged for now.

“Risks that would negatively affect the creditworthiness of the EFSF programme, leading to a downgrade of the EFSF’s rating, would include a deterioration in the creditworthiness of the participating euro area member states,” Moody’s said.

“Conversely, the outlook on the EFSF’s ratings could return to stable if the outlooks on the ratings of Aaa countries with large EFSF contribution keys, i.e. Germany, France and the Netherlands, were moved to stable.”

On Monday, Moody’s lowered its assessment of the German, Dutch and Luxembourg economies from stable to negative, in a first step towards a full credit rating downgrade.

The agency said that the three AAA-rated countries faced risks from the increased prospect of Greece leaving the Euro Zone and from the possible need to bail out Spain and Italy.

“The level of uncertainty about the outlook for the euro area, and the potential impact of plausible scenarios on member states, are no longer consistent with stable outlooks,” it said.

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on July 25, 2012
null
This article is closed for comments.
Please Email the Editor