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Posted by
Olog-hai
on Mon Dec 5 16:47:05 2011, in response to EUEUEUEUEU Olog, posted by RockParkMan on Sat Nov 12 14:58:17 2011.
edf40wrjww2msgDetailOT:detailStr fiogf49gjkf0d Must be the GOP's fault . . . yeah, dat's da tickit! (Meanwhile, the EU's been trying so hard to get rid of those pesky ratings agencies.)
Wall Street Yournal
MARKETS | DECEMBER 5, 2011, 4:14 P.M. ETS&P to Put Entire Eurozone on Watch for DowngradeBy NICOLE LUNDEEN, JEANNETTE NEUMANN and JAVIER E. DAVIDThe 17 nations of the eurozone will be placed on "credit watch negative" by Standard & Poor's Rating Services, according to people familiar with the matter.
The ratings firm is expected to make an announcement after the market closes in New York at 4 p.m. S&P is expected to cite the difficulties of the euro region in containing its debt crisis.
The decision to put the countries on negative credit watch—which signals a downgrade within 90 days has 50-50 odds—would hit six countries with the rating firm's highest, triple-A rating: Germany, France, the Netherlands, Austria, Finland and Luxembourg.
A spokesman for Standard & Poor's declined to comment, saying, "We never comment about market rumors about our ratings."
The expected move comes ahead of this week's European Union summit. On Friday, eurozone officials are expected to lay out plans to enforce stricter budget rules across the currency bloc in an effort to keep the Continent's turmoil from worsening.
The yields on bonds issued by financially stressed European governments such as Italy and Spain have soared in recent months amid questions about growth prospects, debt loads and budget deficits. Rising yields make it costlier for governments to borrow and can slow growth at a time when the region is already dealing with high unemployment and near recession conditions.
The meeting comes on the heels of a coordinated action by the world's central banks to make dollars available to banks at a lower cost. The move, made last week, has helped lower bond yields in Europe by allaying fear that national governments won't be able to fund themselves.
Over the course of the year, European officials have met repeatedly to address the debt crisis. Yet optimism that has followed news of apparent breakthroughs has repeatedly given way to further market unrest, as details fell short of what the market expected.
The S&P move follows an August decision by the rating firm to downgrade the U.S. debt rating to double-A-plus from triple-A after contentious debt-ceiling talks.
Current European regulation requires credit-rating firms to let issuers know of any rating action 12 hours before that change is reported to the broader market. European regulators last month proposed that rating firms notify issuers "a full working day" before publication of a rating action "to leave the rated entity sufficient time to verify the correctness of data underlying the rating."
The rating firms have expressed concerns that 12 hours is already too generous and heightens the possibility that a government could leak an impending downgrade or outlook change.
David H. Levey, a former sovereign-debt analyst at Moody's Investors Service from 1985 until 2004, said rating firms typically used to notify countries of a downgrade or outlook change one to two hours ahead of time because of concerns about leaks to the media and the potential for insider trading by government officials. "The longer the period of pre-announcement, the greater are both of those risks."
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