Standard & Poor’s has warned Germany and the five other triple A members of the eurozone that they risk having their top-notch ratings downgraded as a result of deepening turmoil in the single currency bloc.
The US rating agency is poised to announce that it is putting Germany, France, the Netherlands, Austria, Finland and Luxembourg on “creditwatch negative”, meaning there is a one in two chance of a downgrade within 90 days.
It warned all six governments that their ratings could be lowered to AA+ if the creditwatch review failed to convince its experts.
Markets have been braced for a potential downgrade of France but few expected Germany’s top rating to be called into question.
With regard to Germany, S&P said it was worried about “the potential impact ... of what we view as deepening political, financial and monetary problems with the European economic and monetary union”.
S&P told the six governments it would conclude its review “as soon as possible” after the forthcoming EU summit.
It added: “It is our opinion that the lack of progress the European policymakers have so far made in controlling the spread of the financial crisis may reflect structural weaknesses in the decision-making process within the eurozone and European Union.”
S&P’s move, coming at such a sensitive time, is likely to spark further recriminations from politicians following repeated criticism about how rating agencies behavedduring the crisis.
They stand accused of deepening the crisis and are facing tough new regulation.
S&P declined to comment.
The Financial Times