S&P threatens EU bailout fund downgrade
Tuesday 6 December 2011 - by Nicola.York@gfnews.com
The move has been prompted by S&P's downgrade threat to 15 of the 17 eurozone member states late on Monday, as six of the AAA rated sovereigns guarantee the financial obligations of the European Financial Stability Facility.
But S&P caveats: "We could also affirm the ratings [of EFSF] if we were to lower the current AAA ratings on one or more guarantor members, but had evidence that the EFSF guarantor members were implementing further credit enhancements that were in our view sufficient to mitigate the relevant guarantor members' reduced creditworthiness."
It adds: "We expect to resolve EFSF's credit watch placement within 90 days and, if possible sooner, after we complete the review of EFSF guarantor members currently rated AAA."
Commenting on this in light of the European Commission's recent proposals to clamp down on rating agencies, internal market commissioner Michel Barnier said: "I don't think agencies are taking revenge on our proposals. I can't imagine that. Frankly, no.
"But all financial players, including rating agencies, must understand that they will be subject to public regulation carried out in the most intelligent and effective way possible.
"I'm not jumping to conclusions. I am not starting an ideological fight. All financial actors serve a purpose. Some have more weight than others. I have often said that private agencies whose actions affect the public, warrant public supervision, perhaps more than others."
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