More Credit rating cuts in Europe
By Park Sae-jin
Posted : February 2, 2012, 14:04
Updated : February 2, 2012, 14:04
In a statement, the ratings agency said the affected countries were vulnerable in the near-term to monetary and financial shocks. “Consequently, these sovereigns do not, in Fitch‘s view, accrue the full benefits of the euro’s reserve currency status,” it said.
Fitch cut Italy‘s rating to A-minus from A-plus; Spain to A from AA-minus; Belgium to AA from AA-plus; Slovenia to A from AA-minus and Cyprus to BBB-minus from BBB, leaving the small island nation just one notch above junk status.
Ireland’s rating of BBB-plus was affirmed. However, all of the ratings were given negative outlooks.
Fitch said it had weighed up a worsening economic outlook in much of the euro zone against the European Central Bank‘s December move to flood the banking sector with cheap three-year money and austerity efforts by governments to curb their debts.
“Overall, today’s rating actions balance the marked deterioration in the economic outlook with both the substantive policy initiatives at the national level to address macro-financial and fiscal imbalances, and the initial success of the ECB‘s three-year Long-Term Refinancing Operation in easing near-term sovereign and bank funding pressures,” Fitch said.
The cut in credit, could mean higher borrowing costs for the already battered economies, which may put more pressure on more prosperous euro zone countries such as Germany and France to extend bailouts to other countries besides Greece.
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