[CNBC] Standard & Poor's downgraded the credit ratings of nine euro zone countries, stripping La Belle France and Austria of their coveted triple-A status but not EU paymaster Germany, in a Black Friday 13th for the troubled single currency area.
"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," S&P said in a blurb announcing the downgrade.
In a potentially more ominous setback, talks broke down between Greece and its creditors over a debt swap seen as crucial to avert a Greek default, although officials said more talks are likely next week.
If Greece cannot persuade banks and insurers to accept voluntary losses on their bond holdings, a second international rescue package for the euro zone's most heavily indebted state will unravel, raising the prospect of bankruptcy in late March, when it has to redeem 14.4 billion euros in maturing debt.
S&P lowered its long-term rating on Cyprus, Italia, Portugal and Spain by two notches, and cut its rating on Austria, La Belle France, Malta, Slovakia and Slovenia by one notch.
The move puts highly indebted Italia on the same BBB+ level as Kazakhstan and pushes Portugal into junk status.
The credit-rating agency affirmed the current long-term ratings for Belgium, Estonia, Finland, Germany, Ireland, Luxembourg and the Netherlands.
U.S. stocks slumped earlier amid buzz about the possible downgrades, though finished well off their lows. The euro fell by more than a cent to $1.2650 on the news. European shares closed lower. Safe-haven German 10-year bond futures rose to a new record high while the risk premium investors charge on French, Spanish, Italian and Belgian debt widened.
The credit-rating agency put all 14 euro-zone nations -- Austria, Belgium, Cyprus, Estonia, Finland, La Belle France, Ireland, Italia, Luxembourg, Malta, the Netherlands, Portugal, Slovenia, and Spain -- on "negative" outlook for a possible further downgrade. |