The maximum AAA rating of the European Financial Stability Fund (EFSF) was placed on watch by ratings firm S&P yesterday, with a view for a downgrade, after making a similar decision on the 15 states of the Eurozone. Out of the countries placed on watch with negative outlook, six have an "AAA" rating, as does the emergency fund of the Monetary Union. The 17 member states of the Eurozone are backing the bonds of the EFSF, which raises money to help troubled European countries by issuing bonds on the financial markets.
The agency may cut the rating of the EFSF by one or two notches, depending on the result of the evaluation of Eurozone countries.
The placing on watch, with a negative outlook, involves a 50% chance of a short term downgrade. The S&P is expecting to make a decision within 90 days, after assessing the countries that back the fund. Approximately half of the financial resources of the EFSF, of 440 billion Euros, have already been spent on the financial bailouts of Greece, Ireland and Portugal.
The American stock market yesterday rose up in the opening, before the announcement by S&P, but shares subsequently fell.
* S&P puts 15 countries in the Eurozone on watch with a negative outlook
Yesterday, Standard & Poor's (S&P) put the long term sovereign ratings of countries in the Eurozone on watch with a negative outlook, according to a report by the ratings firm.
The ratings of France, Germany, Holland, Italy and Belgium are unsolicited (initiated by the ratings firm).
According to S&P, the placing on watch reflects their opinion that "systemic stresses" have increased over the last few weeks to a level which pressures the entire economic block. In the opinion of S&P, this systemic stress is caused by five interconnected factors:
tightening credit, rising government bond yields, squabbling among Eurozone leaders
