Business     

S&P puts 15 eurozone nations on credit watch

China.org.cn, December 6, 2011

• Standard and Poor's Monday put the long-term sovereign-debt ratings of 15 eurozone nations, including the area's six AAA rated countries, on negative watch.

  French President Nicolas Sarkozy (L) welcomes visiting German Chancellor Angela Merkel at the Elysee Presidential Palace in Paris, France, Dec. 5, 2011. Sarkozy and Merkel met in Paris to thrash out a plan to save the euro. [Xinhua]

  
  
  

  The "CreditWatch negative" means there is at least a 50 percent chance of a downgrade within 90 days for these countries.

  S&P said that it expected to announce any rating changes "as soon as possible" following this week's European Union summit on Dec. 9, where policy makers are expected to lay out plans to enforce stricter budget rules, The Wall Street Journal reported.

  The firm said in its latest statement that "the 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."

  These systemic stresses, according to the rating agency, stem from tightening credit conditions, higher risk premiums, continuing disagreements among European policy makers, high levels of government and household indebtedness and rising risk of economic recession, Xinhua reported.

  Meanwhile, S&P maintained its negative outlook for Cyprus, and Greece wasn't put on "CreditWatch."

  The firm also said that ratings could be cut by one notch for Austria, Belgium, Finland, Germany, Netherlands and Luxembourg, and by up to two notches for the other governments.

  S&P's move came as investors cheered the Franco-German plan to rewrite the EU constitution for more central control of euro zone budgets, Xinhua said.

  French President Nicolas Sarkozy and German Chancellor Angela Merkel Monday agreed on a series of reforms aimed at changing the EU treaty to impose tough control of eurozone budgets.

  Merkel and Sarkozy said that Europe's two biggest economies were aligned on backing automatic penalties for deficit violators and locking limits on debt into euro states' constitutions.

Copyright ? China.org.cn. All Rights Reserved