Germany and France may be stripped of their AAA credit ratings by Standard & Poor’s said as the debt crisis prompts 15 eurozone nations to be put on review for possible downgrade.
The eurozone’s six AAA-rated countries are among those to be placed on a negative outlook, and their credit ratings may be cut depending on the result of a summit of European Union leaders on Dec. 9, S&P said Monday in a statement.
The firm said ratings could be cut by one level for Austria, Belgium, Finland, Germany, Netherlands and Luxembourg, and by up to two notches for the other governments.
S&P said it maintained the negative outlook for Cyprus, and Greece wasn’t put on “creditwatch.”
“Systemic stress in the eurozone has risen in recent weeks and reached such a level that a review of all eurozone sovereign ratings is warranted,” S&P said in a statement.
The downgrade warnings come as German Chancellor Angela Merkel and French President Nicolas Sarkozy push for a rewrite of the EU’s governing rules to tighten economic cooperation in a demonstration of unity on ending the debt crisis. With the fate of the currency shared by the 17 eurozone countries at risk, Ms. Merkel and Mr. Sarkozy presented a common platform for a Dec. 8-9 summit of EU leaders in Brussels that aims to halt the crisis now in its third year.
S&P roiled global equity, bond, currency and commodity markets on Nov. 10, when it sent and then corrected an erroneous message to subscribers suggesting France’s rating had been downgraded.
Downgrades of Germany and France would affect the rating of the European Financial Stability Facility, the bailout fund for struggling eurozone countries that has funded rescue packages for Greece, Ireland and Portugal partially through bond sales. If the EFSF has to pay higher interest on its bonds, it may not be able to provide as much funding for indebted nations.