French AAA Grade at Risk as Downgrades Sweep Europe

[Joanne98]

Source: Bloomberg

France risks losing its top AAA grade as Europe’s debt crisis prompts a wave of downgrades that threatens to engulf the region’s highest-rated borrowers, with Belgium also facing a possible cut.

Moody’s Investors Service said Dec. 15 it may lower Spain’s rating, citing “substantial funding requirements,” and slashed Ireland’s rating by five levels on Dec. 17. Standard & Poor’s is reviewing its assessments of Ireland, Portugal and Greece. Costs to insure French government debt rose to a record today with the country’s credit default swaps more expensive than lower-rated securities from the Czech Republic and Chile.

“Every sovereign may get penalized in the year ahead,” said Toby Nangle, who helps oversee $46 billion as director of asset allocation at Baring Asset Management in London. “It would be a big deal if France was to have its AAA rating stripped. I don’t think the likelihood of a downgrade is reflected in the market.”

European Union leaders agreed last week to amend the bloc’s treaties to create a permanent debt-crisis mechanism in 2013 in an effort to stem contagion that started more than a year ago in Greece. Government bond yields climbed across the region even after Greece and Ireland were rescued and a backstop facility worth about $1 trillion was created.



Read more: http://www.bloomberg.com/news/2010-12-20/france-s-aaa-grade-at-risk-as-rating-downgrades-sweep-europe-euro-credit.html

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The bondholders are going to force extreme austerity on every country on Earth! All so they don't have to take a single penny of a haircut.

[DetlefK]

1. How reliable are these ratings anyway? Toxic AAA assets caused the recession.

[caseymoz]

2. It doesn't really matter.

If the ratings were regarded as utterly unreliable, it would cause just as bad a panic and as much upheaval, but I did already think these rating agencies were highly discredited after the mortgage-derivative debacle. So why are they back being reported now?

What I suspect is happening, though, is that corporations (read the wealthy) are out to cripple governments throughout the world. The coup is on.

[madrchsod]

3. good old moody`s investors....

bankrupting countries and companies around the world...

[niceypoo]

4. Once it happens here, it's over

The interest on the national debt will grow so fast we wont be able to keep up, and we will default. What remains to be seen is what will rise from the ashes of Capitalism?