Citing the precarious state of the eurozone debt crisis, Moody’s Investors Service cut the debt ratings of six European countries on Monday.
Bloomberg reported that Italy was cut from A2 to A3, Spain went from A1 to A3 and Portugal dropped from Ba2 to Ba3. All received negative outlooks. Malta, Slovakia and Slovenia also saw their ratings fall. In addition, the agency warned that the U.K. and France could lose their top ratings. France, and Austria as well, were already dropped from their triple-A status by Standard & Poor’s in January.
Alistair Wilson, chief credit officer for Europe at Moody’s in London, was quoted saying, “Policy makers have made steps forward but we do not think they have done enough to reassure the market that we are on a stable path. What will guide long-term ratings is the clarity and the performance of policy makers and the macro picture.”
In a Reuters report, Bart Oosterveld, managing director at Moody’s sovereign risk group, said that if Greece were after all to depart the eurozone the toll on financial markets and credit ratings “would be quite profound.” Referring to the European Central Bank’s three-year loans aimed at improving liquidity, he said, “The markets are better in the short term but probably not in the longer term. We think the markets remain quite fragile.”
Shen Jianguang, chief economist for Greater China at Mizuho Securities Asia Ltd., who previously worked for the International Monetary Fund, was quoted saying, “The ratings agencies are kind of behind the curve. The risks have actually been falling in Europe. There may be worries that countries cutting fiscal spending may drag on their economic growth, but the concerns aren’t new and the downgrade should have minimal impact on market sentiment.”