Moody’s Downgrades European Union To Outlook Negative
Not entirely surprising following the outlook changes for Germany, France, UK, and Holland but still an intriguing move right before Draghi’s big unveiling: Moodys maintains AAA rating but shifts to outlook negative.
Moody’s believes that it is reasonable to assume that the EU’s creditworthiness should move in line with the creditworthiness of its strongest key member states considering the significant linkages between member states and the EU, and the likelihood that the large Aaa-rated member states would likely not prioritize their commitment to backstop the EU debt obligations over servicing their own debt obligations.
Interestingly they also note that a further cut could occur due to: changes to the EU’s fiscal framework that led to less
conservative budget management…
Full statement:
Moody’s maintains the European Union’s Aaa rating, changes outlook to negative
Frankfurt am Main, September 03, 2012 — Moody’s Investors Service has today changed to negative from stable its outlook on the Aaa long-term issuer rating of the European Union (EU). The rating agency has also changed to negative from stable its outlook on the provisional (P)Aaa rating of the EU’s medium-term note (MTN) programme.
A provisional rating for a debt facility is an indication of the rating Moody’s would likely assign to future draw-downs from the facility, pending the receipt of documentation detailing the terms of the debt issuance. Moody’s policy is to assign provisional ratings to all MTN programmes.
