Moody's cuts ratings, but Italy, Spain raise funds
Moody's has chopped the debt ratings of Italy, Spain and Portugal and put France, Britain and Austria on warning, saying they were increasingly vulnerable to the eurozone crisis.business Updated: Feb 14, 2012 21:06 IST
Moody's has chopped the debt ratings of Italy, Spain and Portugal and put France, Britain and Austria on warning, saying they were increasingly vulnerable to the eurozone crisis.
Casting doubt over whether Europe's leaders were doing enough to reverse the downslide of the region's economy and financial sector, Moody's also cut its ratings for Slovenia, Slovakia and Malta on Monday.
The ratings agency cited the region's weak economic prospects as threatening "the implementation of domestic austerity programs and the structural reforms that are needed to promote competitiveness."
Market confidence "is likely to remain fragile, with a high potential for further shocks to funding conditions for stressed sovereigns and banks," it said.
Moody's also questioned whether Europe was pulling together adequate resources to deal with the crisis.
"To a varying degree, these factors are constraining the creditworthiness of all European sovereigns and exacerbating the susceptibility of a number of sovereigns to particular financial and macroeconomic exposures," it noted.
Austria, France and Britain all retained the top AAA rating but were put on negative outlooks, a warning that if conditions worsen they could be hit with full downgrades.
Italy was cut one notch to A3 from A2; Spain two notches to A3 from A1, and Portugal one step to Ba3 from Ba2.
Slovakia and Slovenia both went down one step to A2, while Malta moved one step to A3.
The downgrades came a day after Greece and Europe appeared to pass a major hurdle when the Greek parliament agreed to a tough austerity package despite rioting in the streets of Athens and other cities.
That appeared to open the way for a comprehensive debt restructuring and second massive bailout of the country, avoiding a default that could have sparked more turmoil in the eurozone.
"The negative outlooks reflect the presence of a number of specific credit pressures that would exacerbate the susceptibility of these sovereigns' balance sheets, and of their ongoing austerity programs, to any further deterioration in European economic conditions and financial landscape," it said.
Moody's said it had limited the magnitude of the rating cuts due to the "European authorities' commitment to preserving the monetary union and implementing whatever reforms are needed to restore market confidence."
First Published: Feb 14, 2012 08:50 IST