Tuesday, July 24, 2012

Moody’s warns eurozone core

Financial Times
July 24, 2012

Moody’s has lowered its outlook for triple A-rated Germany, the Netherlands and Luxembourg to negative from stable, in a move that highlights the dangers the core of the currency union faces from the eurozone debt crisis.

The rating agency said the outlook had changed because of both the increased likelihood of an exit by Greece from the single currency and the need for greater financial support for struggling eurozone countries from the strongest members of the bloc.

“Moody’s now has negative outlooks on those triple A-rated euro area sovereigns whose balance sheets are expected to bear the main financial burden of support,” it said.

Finland’s triple A-rating was affirmed with a stable outlook given the country’s “unique credit profile”, leaving it as the sole exception among euro area sovereigns.

Jean-Claude Juncker, the Luxembourg prime minister who heads the group of eurozone finance ministers, attempted to calm the waters ahead of Tuesday’s market opening, issuing a statement noting the Moody’s warning also confirmed “the very strong rating” of Germany and its fellow eurozone triple-As.

“We reiterate our strong commitment to ensure the stability of the euro area as a whole,” Mr Juncker said.


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