Europe Bailout Fund Loses Top Rating at S&P

[marmar]

(Bloomberg) The European Financial Stability Facility, the euro area’s bailout fund, lost its top credit rating at Standard & Poor’s after earlier downgrades of France and Austria.

The rating was cut to AA+ from AAA, S&P said yesterday in a statement and removed the facility from CreditWatch with negative implications. S&P had said on Dec. 6 that the loss of an AAA rating by any of EFSF’s guarantors may lead to a downgrade.

“The EFSF’s obligations are no longer fully supported either by guarantees from EFSF members rated AAA by S&P, or by AAA rated securities,” the rating company said. “Credit enhancements sufficient to offset what we view as the reduced creditworthiness of guarantors are currently not in place.”

The EFSF, designed to fund rescue packages for Greece, Ireland and Portugal partially with bond sales, owed its AAA rating to guarantees from its sponsoring nations. Two of those sovereigns, France and Austria, were cut on Jan. 13 to AA+ from AAA by S&P, which also downgraded seven other euro countries. ...............(more)

The complete piece is at: http://www.bloomberg.com/news/2012-01-16/s-p-cuts-efs-facility-to-aa-from-aaa.html

[Art_from_Ark]

1. Meanwhile, S&P still rates some subprime bonds as AAA material

http://www.bloomberg.com/news/2011-08-31/subprime-mortgage-bonds-getting-aaa-rating-s-p-denies-to-u-s-treasuries.html

How anyone can take S&P seriously is beyond my understanding