S&P Downgrades European Union’s AAA Rating

redit agency Standard & Poor’s cut its triple-A rating of the European Union by one notch on Friday, saying it had concerns about how the bloc’s budget was financed, a view EU leaders and other officials dismissed as misguided.

S&P’s announcement came the day after the EU reached a deal to overhaul the region’s banking sector, an agreement many commentators said fell short of expectations, although S&P said it had not factored into its credit assessment.

“In our opinion, the overall creditworthiness of the now 28 European Union member states has declined,” the rating agency said in a statement that came 11 months after it announced it had a ‘negative’ outlook on the bloc.

“EU budgetary negotiations have become more contentious, signaling what we consider to be rising risks to the support of the EU from some member states.”

European officials said they were not surprised by the move to AA+ since S&P recently downgraded the Netherlands and has lowered its view on six other member states – France, Italy, Spain, Malta, Slovenia and Cyprus – in the past year.

via Reuters

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza