Skip to comments.Moody's cuts EU outlook to negative on credit risks
Posted on 09/03/2012 10:50:10 PM PDT by bruinbirdman
Moody's has lowered the European Union's long-term issuer rating outlook from stable to negative, saying the move reflected credit risks of the bloc's key budget contributors.
"It is reasonable to assume that the EU's creditworthiness should move in line with the creditworthiness of its strongest key member states," it said, citing negative outlooks for Britain, France, Germany and the Netherlands.
Despite Moody's pronouncement, the euro rose to a two-month high of $1.2618 in Asian trading on Tuesday, compared with $1.2598 late Monday in London trade, AFP reported.
Dealers were keeping faith with the euro amid rising expectations that the European Central Bank (ECB) will on Thursday announce a round of sovereign bond purchases from struggling economies.
Investors also brushed off data that showed eurozone manufacturing activity contracted for a seventh straight month in August.
Moody's maintained the EU's triple-A rating, saying its "two key rationales" for assigning the bloc its highest rating remained unchanged: its "conservative budget management" and "the creditworthiness and support provided by its 27 member states".
Britain, France, Germany and the Netherlands - which together account for about 45pc of the EU's budget revenue, according to Moody's - also maintain a AAA credit rating.
The agency, however, did not exclude the possibility of a future EU downgrade, saying in its statement that a "deterioration in the creditworthiness of EU member states" could prompt such a move.
"It is reasonable to assume the same probability of default by the EU on its debt obligations as the highest rated key members states' probability of default," Moody's said.
The agency said while there were "structural features in place that enhance the EU's creditworthiness", they were "not sufficient to delink the EU's ratings from the ratings of its strongest key member states".
"Additionally, a weakening of the
(Excerpt) Read more at telegraph.co.uk ...
Even more embarrassing, Bulgaria says the EU is financially shaky. As a result Bulgaria has decided to not convert to the Euro currency, killing a plan that has been in place for over 15 years.
Bulgaria is the poorest of the 27 countries in the EU. They’ve been getting $500 million a year in aid from the EU, but even that wasn’t enough to bribe the country into the stupidity of converting to the Euro as it falls apart.
The party’s not over yet . . .
When Bulgaria thinks you aren’t stable, you in big trouble mister!
It’s getting dang close, nobody wants to chip in for the gas for a beer run