France, Austria Lose AAA Credit Rating
It was a "Black Friday" for nine members of the Euro Zone earlier today after they had their credit ratings downgraded by Standard & Poor's.
Cyprus, Italy, Portugal and Spain were hit especially hard, as S&P decided to downgrade their long-term ratings by two notches.
Austria, France, Malta, Slovakia and Slovenia were all downgraded by one notch. Austria and France both lost their pristine AAA credit ratings, which is an embarrassing development for both countries (just as it was for the United States this past summer when they lost their AAA credit rating at S&P).
It wasn't all bad news today, however, as S&P decided to leave Germany's AAA rating intact and switch them from "Creditwatch negative" to "stable".
S&P currently has a negative outlook on Austria, Belgium, Cyprus, Estonia, Finland, France, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovenia and Spain, meaning that there is "at least a one-in-three chance that the rating will be lowered in 2012 or 2013".
S&P said that "the policy initiatives that have been taken by European policymakers in recent weeks may be insufficient to fully address ongoing systemic stresses in the eurozone." These stresses include:
1) tightening credit
2) increase in risk premiums
3) simultaneous attempt to delever by governments and households
4) weakening economic growth prospects
5) disputes between European policymakers over how to address "challenges".
Source: StandardandPoors.com - Standard & Poor's Takes Various Rating Actions on 16 Eurozone Sovereign Governments
Filed under: The Economic Meltdown