At Christmas everyone is better off, even the rating agencies. Moody's confirmed triple-A credit ratings for Austria and the United States, respectively with stable and negative outlook. Good news for Vienna, whose valuation is jeopardized by the contagion of the eurozone debt crises.
On the other hand, the situation in Washington is less good. A clear warning has arrived from the agency: if no new steps are taken in the direction of deficit reduction, the rating could be revised downwards. “Structural fundamentals, political stability and post-crisis economic prospects support the triple AAA – says Moody's – but the outlook was lowered last August due to the risks of continued progress in the medium term of the federal public debt. Without further deficit reduction measures, the rating could be placed on watch for a downgrade during the next year or two.
But the risk does not concern only the star-spangled economy. Earlier this month, six of the countries that still hold the coveted AAA long-term debt rating were placed on negative Credit Watch status by Standard & Poor's. They will undergo an assessment which could result in a downgrade within three months. They risk lose the certificate of maximum reliability France, the Netherlands and Austria, Luxembourg, Finland and even Germany, the most reliable economy in Europe, which manages to place its securities at the lowest yields.
The states most affected by the crisis have certainly not been spared. Greece, with a spread exceeding 3000 basis points, it certainly does not enjoy the appreciation of the three main agencies, which have already downgraded the value of Greek bonds to junk levels some time ago. Italy, Belgium, Spain, Slovenia, Ireland and Cyprus have also not been immune from the harsh judgments of analysts and have seen their ratings cut several times in recent months.
Fitch would also be evaluating for the end of this year whether to make another cut that would push these countries further towards a higher risk step.
