S&P downgrades 9 EU countries Merkel sees long road ahead to restore confidence
BERLIN/ATHENS — Stand- ard & Poor's downgraded the credit ratings of nine eurozone countries, stripping France and Austria of their coveted triple-a status but not EU paymaster Germany, in a Black Friday the 13th for the troubled single currency area.
"Today's rating actions are primarily driven by our assessment that the policy initiatives that have been taken by European policymakers in recent weeks may be insufficient to fully address ongoing systemic stresses in the euro zone," the Us-based ratings agency said in a statement.
In a potentially more ominous setback, negotiations on a debt swap by private creditors seen as crucial to avert a Greek default that would rock Europe and the world economy broke up without agreement in Athens, although officials said more talks are likely this week.
If Greece cannot persuade banks and insurers to accept voluntary losses on their bond holdings, a second international rescue package for the euro zone's most heavily indebted state will unravel, raising the prospect of bankruptcy in late March, when it has to redeem 14.4 billion euros in maturing debt.
S&P cut the ratings of Italy, Spain, Portugal and Cyprus by two notches and the standings of France, Austria, Malta, Slovakia and Slovenia by one notch each. BERLIN — German Chancellor Angela Merkel said yesterday that Europe still had a "long road" ahead to restore investor confidence, after a raft of credit rating downgrades of EU countries.
"The decision confirms my conviction that we in Europe still have a long road ahead of us until investor confidence is again restored," she told reporters in the northern German city of Kiel.
"But it's also apparent that we have pursued resolutely this road of a stable currency, solid finances and sustainable growth," she said.
Merkel also stressed that Standard and Poor's, which decided to cut the ratings of nine euro zone nations including top-rated Austria and France but not Germany, was just one of three ratings agencies. She said they had "taken note" of
The move puts highly indebted Italy on the same BBB+ level as Kazakhstan and pushes Portugal into junk status.
It put 14 euro zone states on negative outlook for a possible further downgrade, including France, Austria, and still triple-a-rated Finland, the Netherlands and Luxembourg.
Germany was the only country to emerge totally unscathed with its triple-a rating and a stable outlook.
French Finance Minister Francois Baroin, speaking after an emergency meeting with President Nicolas Sarkozy, played down the impact of Europe's second-biggest econo- my being downgraded to AA+ for the first time since 1975.
"This is not a catastrophe. It's an excellent rating. But it's not good news," Baroin told France 2 television.
The euro fell by more than a cent to $1.2650 on the news. European stocks, which had been up for the day, turned negative, but reaction to the widely anticipated news was moderate. Safe-haven German 10-year bond futures rose to a new record high while the risk premium that investors charge on French, Spanish, Italian and Belgian debt widened.
Euro zone finance ministers responded jointly by saying in a statement they had the decision. "It did not totally surprise us after discussions of recent weeks," she said. German Finance Minister Wolfgang Schaeuble also sought to play down the ratings downgrade of France and Austria, insisting euro zone nations were on the "right path" and warning against overestimating its impact.
"In recent months, we have increasingly come to an understanding worldwide that we should not overestimate the ratings agencies in their assessments," he told television station RTL.
Germany, Europe's top economy, was spared by S&P, maintaining its top AAA rating. But the euro zone economy was plunged back into crisis as France and Austria were reduced from AAA to AA and talks to agree a Greek debt writedown stalled. — AFP taken "far-reaching measures" in response to the sovereign debt crisis and were accelerating reforms towards stronger economic union.
Greek negotiators, who have repeatedly voiced confidence in a deal in which private creditors would accept writedowns of 50 per cent of the face value of their bond holdings, said they were now less hopeful, warning of "catastrophic consequences" for Greece and Europe if they failed.
"Yesterday we were cautious and confident. Today we are less optimistic," a source close to the Greek task force in charge of the negotiations said. The Institute for International Finance, negotiating on behalf of banks, said: "Under the circumstances, discussions with Greece and the official sector are paused for reflection on the benefits of a voluntary approach.
The two sides are divided principally over the interest rate that Greece will end up paying, which determines how much of a hit banks take. While both appear to be engaged in brinkmanship, there are also doubts about the takeup rate of any voluntary deal, since some hedge funds have bought up Greek debt and want to be paid out in full or trigger default insurance. MUSCAT — Diversification has always been the forte of Al Madina Financial Services and Investments. With one of the best track records in the region in a wide range of financial and investment services and a portfolio that includes real estate, insurance, logistics and food and beverages, the company has decided to venture into the field of education.
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