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THE RATINGS AGENCY Standard & Poor’s has downgraded the credit rating of France – ending weeks of speculation that the country was set to lose its coveted AAA rating – while Portugal has been downgraded to junk status.
S&P this evening said it was cutting the rating of France – as well as Austria, Malta, Slovakia and Slovenia – by one notch, and the ratings of four other countries – including Italy, Spain, Portugal and Cyprus – by two notches.
Other European economies such as Germany, the Netherlands, Luxembourg and Belgium have escaped the knife. Ireland’s rating has also been left intact.
S&P said it was removing all of the eurozone members except Cyprus off its ‘creditwatch’ – meaning another downgrade is not expected in the short-term future – but that 14 countries, including Ireland, would retain a ‘negative’ outlook.
That status means there is a one-in-three chance that their credit ratings could be lowered further than where they already stand, but such a downgrade may not come for two years.
Germany – which is now the only major eurozone economy to retain its AAA status – and Slovakia are the only two euro members who are not on negative outlook.
Portugal’s downgrade means it becomes the second eurozone member, after Cyprus, to be ranked as ‘junk’ by S&P; Ireland’s rating, BBB+, is one notch above junk status, though Ireland is separately rated ‘junk’ by Moody’s.
In a note accompanying the downgrade, S&P said the “policy initiatives taken by European policymakers in recent weeks may be insufficient to fully address ongoing systemic stresses in the eurozone”.
The impact of the French downgrade will make a significant dent on Ireland’s own financial fate – even though the first rumours of the French downgrade actually caused Irish bond yields to fall.
A downgrade of French bonds almost certainly means that the EU’s bailout fund, the European Financial Stability Fund, will also lose its AAA rating in the coming weeks.
Losing that coveted status will mean that it is more expensive for that fund to borrow cash itself – and more expensive borrowing for the EFSF means more expensive loans to Ireland.
Speculation of the downgrade sent the euro close to its lowest for 18 months against the US dollar – a price which wasn’t helped by reports that Greece’s talks with its private bondholders had collapsed.
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I’m perplexed as to why S&P carry so much weight – they triple A rated the sub prime mortgage debt that brought about the banking crisis in the first place.
Perhaps we need to downgrade S&P to the junk that they are?
markets is all about sentiment … and s&p changes market sentiment based on rating announcement . they did made mistakes but part of the reason easy most euro countries cooked the books and had off balancesheet activities
It’s bad for us economically, however emotionally it’s a big fat win for Ireland. Now how will we fit an arrogant “f” into piigs?
man I do dislike sarkozy, he is a prize tit. Short, short frenchman.
good once the big boys get hit this will be sorted fast
Funny that when there is a small glimmer of light for the Eurozone, the rating agencies step in and quench out any hope of returning to stability. Makes you wonder………
I was just going to post the same thing. I normally don’t buy into conspiracy theories but it was interesting that this announcement came a day after the sucessful auction bonds for Spain and Italy and a rise in the value of the Euro in the aftermath of that. It really smacks of an agenda.
What annoys me more about this is that we still allow these agencies to call the shots and drive markets. These are the same agencies who gave glowing reports to failing bank all through 2007 and 2008, the same agencies who gave top rating to Lehman Brothers just months before it collapse and the same agencies who were proved to be actually in collusion with banks to give good ratings thus completely distorting their findings.
And yet less that three or four years later with no change whatsoever in the leadership or management of these agencies we still allow their pronouncements to potentially destroy economies and financial institutions.
Apologies for the multiple typos in that last post. It’s what happens when you post in anger and in a hurry. It would be great if Journal.ie had some form of edit process for comments.
@james agree we want edit facilities or were the banned be our German overlords
What glimmer of light?
its hard to call. there probably have to be ratings agencies. Its like a financial separation of powers. Its just that counter-intuitively, they have to be seen as real referees right now, given how badly they f**ked up prior to 2008. They just down-graded the united states of america, after ferocious full claw last minute lobbying by the treasury – they downgraded the most financially and militarily powerful nation in human history. and its surprising they didn’t get labelled terrorists for that one.
*I’m a dope on this*. but whatever they do, I presume, that in some sense, as referees, they simply have to be there. They just haven’t been near Europe in our living memory.
Some powerful people must be betting against the euro.
Rating agencies just another clog in a corrupt system but always great to see sarkozy kicked in the b*llox.
I know I am being petty, and this will possibly cost us. BUT I AM SO HAPPY SARKOSY CAN NOW SING FOR OUR CORP. TAX RATE. I WILL HAVE A LARGE BRANDY.
Hennesys?
MAKE MINE A DOUBLE, AND LET US BURN SOME GARLIC.
If that rating agency was any good, it’d be called Excellent & Rich.
Great work there S&P, because you predicted the economic crash so well when you were giving AAA ratings to companies now gone bust.
its a value judgement . that was a up cycle … now is the down cycle. and that’s how it works
Watch how quick this mess gets sorted now that its landed in Frances back yard!!
Thats Sarkozy gone in May then ;D More Good news but poor Angela will be heartbroken Hollande just wont be the same…
Taxpayer funds government — government props ups banks — banks bailout bondholders — bondholders ransome government — government screws taxpayer. This is the state of play as faceless investors continue -unopposed – to usurp the role of national governments. What’s needed now is strong national leaders to break this cycle. Unfortunately most leaders worldwide (regardless of political philosophy) put the welfare of their citizens a poor second to the sanctity of the mega rich banking corporations. Maybe Sarkozy will realise now that Big Brother had him (France) in their sights all along!
Big brother being big banks in america. Got that right William. They never forgave them for having to change “French fries” to “freedom fries”.
Now maybe we will have our day. Will Sarkozy take his head out of the sand now he has S&P up his arse. The pressure has now moved to France. Welcome to the pleasure dome miseur.
I know it might be bad news to us or whatever, but I’d just like to say, in the voice of Nelson from The Simpsons…. HA HA!!!!!
Why does anyone care what these ratings agencies say? They’re usually wrong.
You’d wonder alright.
Right or wrong sadly investors care which causes problems for everyone else.
They weren’t just wrong, they were directly responsible by giving AAA ratings to the lousy mortgage derivatives and thereby kicking off the whole mess in the US. How they are allowed to still operate is beyond me.
Looks like they’re doing a pretty good job of ensuring weakness of the euro thus ensuring American investors can buy up European government bonds at a pretty cheap rate. They might just upgrade these countries closer to payout time when the american investors will be getting €€€ into their pockets..could be a nice profit making exercise.
i’ve just come from the brian ‘the wanker’ hayes thread….
im full on raging!
so time to tell the sarky bollix me thoughts.
eat shit and die ya toad!
yep me too Joseph. The Brian Hayes speech is some piece of work. Blood is boiling. The household charge is the first opportunity to take a stand since the election.
dave, im feelin this one in me bones.
i have said several times that i will not be payin
come hell or high water.
in the last few days ive been havin the same thoughts as you,
this is the first opportunity to really let them spanners know
what many average joes like meself thinks.
i think this is gonna get big
yep time to take a stand.
Catch you on the flip side! :-)
I spoke to someone from France early last year.
And he said that their government was warehousing €80,000 of his mortgage at 0% interest and
that this had been a common thing going on for a few years
put in place by the government to help people with distressed mortgages.
Was Sarkozy cooking the books?
no he just wanted to get re elected as they say in politics ” will do whatever necessary “
Do you know Hello Spruiker, that’s the only thing that I’ve ever read about Sarko that made me – well I won’t say like him – but it makes me dislike him a little bit less………………..
That’s the kind of thing that should be going on here (and I am NOT a mortgage holder). Strange tho – the state of their banks – how they can afford it and their HUGE public service. …….. hhhmmmmmmmmm wouldn’t be supported by the tax payers of another (small peripheral ) country with a “low” tax rate, now would it?????
BITE ME SHORT FRENCH MAN.
S+P and Moody’s are both American credit rating agencies, so they downgrade European countries credit ratings which means the dollar gains again against the euro. Hmm what a coincidence!!!
It wouldn’t matter what country the ratings agencies came from, anyone with half a brain knows euro countries are in the mire. When Greece goes, the whole thing will come down like a house of cards. The only strange thing is how France only came down to AA. As for the Irish government who think staying at BBB+ with negative outlook is something to shout about, well that sums up why we are unlikely to escape it until the Greek default shakes things up.
This is disgraceful call the guards in naas at once
Ah, you miserable creatures! You who think that you are so great! You who judge humanity to be so small! You who wish to reform everything! Why don’t you reform yourselves? That task would be sufficient enough.”
― Frédéric Bastiat
One large slice of humble pie coming up.
Whole thing rigged. Corporations pay s&p moodys. They re ran by same cabal that own US congress, the military industrial corporations, big oil and printing rights to the US dollar. Nice little portfolio really and a war in Iran should boost earnings nicely soon enough..
Sarko looks like he is going through that moment, which all of Batman’s enemies go through.
The moment where they think:
“*fuck it* I’m gonna go and put a mask on and start killing people”
Anyone placing their faith in the omniscience of the ratings agencies should reflect on the AAA ratings they handed out prior to the Lehman collapse. That such a small group, largely unaccountable to parliaments but not entirely to the institutions that pay them fees, wield such influence over the living standards indirectly of so many should have politicians demanding greater regulation. Instead, the banks have bought of so many of the politicians throughout Europe and the US, that the Endas and Gilmores of this world squeak their protests with the timidity of church mice..
adam, i think you do church mice a great disservice
Maybe the lenders should be regulated (obliged to ignore ratings and swallow as much debt as issued by the governments.
Next stop, Germany
I see many think this will get sorted now. How?
France and Germany are running the show so know its so close to Germany and in France things will “magically” speed up.
Yes I got that bit alright. But what ‘things will magically speed up’? Will they start printing Euros? Will they write debt off? What do you guys think the options are for France and Germany to now quickly solve this?
I think they will finally get the ECB to start lending to sovereign countries, probably split the euro in two and…as a last option, write off debt…but they are the biggest creditors, so I doubt that will be their first option.
Ryan, they are already lending to sovereigns. Why you think recent Spanish auction was a success and Italian little less so but still ok? The ECB gives 3yr 1% loan to banks ant banks buy 5% yield Italian and Spanish debt.
I don’t think they have too many options. Other than the Euro semi-split or full return to national currencies they have precious little options available within the time frame set largely by the expiration of various bailout deals. Disorderly Greek default is looking more and more as a plausible possibility and that Ireland will return to bond markets is the DOF pipe dream. Events will continue to happen faster than the EU can react given the intricacies of the EU governing structures.
hard to know really. but the fact is that this is the first time that the financial fart has wafted directly back to the champs elysses.
the french economy and its dependence on hovvering up nearly forty percent of the EU agricultural transfer budget is thus far unexamined. Its industrial practise, its working hours, its general haughtier… its long past time france got a kicking.
We’ve had ours, Spain is getting theirs, greece’s face is in the mud, Italy is barely starting to scream – past time france got what was coming to them. They are a sclerotic fat age old imperial power and no friend of ours. Britain is more of a mate. They gave us bilateral loans and tried alone to back us in the room when geithner called for us to go on the rack. that actually is true.
So no more sucking up vast sums of the EU budget to preserve their picture postcard French agricultural scene.
its time France got it right in the nuts. Past time.
Another good excuse to screw us should we need a second bailout…. Bravo!
The banks and the financial institutions have us and governments by the balls. They control the money so they can do what they want. Politicans aint got the same problems we got so what do they care. Something radical is needed to sort this shit out.
It would be great if The Journal could do a small article on these rating agencies, what they do exactly, why they have such a large impact etc. It might help people less clued in (like myself and the few other teens who read the news daily). Or has an article like this been written?
There was one done its linked under the article
Just watch… they’ll really start sweating now.
Then the blame game will start “Fk ye Ireland, fk ye Greece, Spain… eh… right pattern here..”
O’ dear – this might effect the man from further getting re-elected!
My heart is broken!
(NOT!)
Ha
as expected . no surprise there .
next news :) hedge funds crash the greek negotiation and trigger default.
William o Shea (first comment) has it right, the funds are playing the system, forcing Governments to chase their tails to satisfy the bond holder$ (Goldman conspiracy)
He is poetry in prose.
Schadenfreude aside, this will increase the cost of borrowing for the bail-out fund, so more costs for us… Maybe now that it’s an important country (who said no to the EU constitution and nobody played Mrs Doyle’s ah go on, ye will… with them) that’s been hit they’re still unlikely to fix it because they’re trying to fix the system but it’s the system they’re trying to fix which is the cause of the mess and they lack the courage or vision to try something completely different
Unless I am wrong I believe we have a fixed rate mortgage rather than variable. So this means less margin for those supporting the bailout fund rather than higher costs for Ireland.
Bet Merkozy will propose making the PIIGS pay for more of the French debt mountain.
I agree with the whole not paying the charge thing. But surely if we could get the mortgage strike thingy back on track we could really shake things up a whole lot quicker.
Yes Ciaran Corrigan
The same thought crossed my mind.
It has to be said though that this company has an impeccable reputation as far as market analysis go.
But…In the times we live in, I believe that negative comments (such as downgrading) create an atmosphere of severe financial unease.
The Brits are thrilled they can barely contain themselves lol
F*%*%* PIIGS
Sarky the little swine lol
QE1 time to print 7trillion yoyo’s so we can all enjoy ourselves again…
Sarkozy election rating cut….. BB-. Not a sure banker to be re- elected. Yahooo
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