Standard & Poor`s cuts EFSF rating
Baku, January 18 (AZERTAC). Standard & Poor`s followed up its mass cuts to the credit ratings of euro zone countries on Friday with a cut in the credit rating of the European Financial Stability Facility on Monday. EFSF officials said that nonetheless the facility was well enough funded to cope with the eurozone debt crisis as markets barely reacted to the news.
Reuters reported that the rating cut, from triple-A to double-A+, came Monday after the ratings agency said that the dependability of the EFSF depended on its remaining triple-A guarantors. France and Germany are the largest of those, and France was one of the countries cut on Friday. In a statement, S&P said, "We consider that credit enhancements that would offset what we view as the now-reduced creditworthiness of the EFSF`s guarantors and securities backing the EFSF`s issues are currently not in place. We have therefore lowered to double-A+ the issuer credit rating of the EFSF, as well as the issue ratings on its long-term debt securities." Despite S&P`s action, several European officials said that the EFSF was well positioned to cope with its mission until the European Stability Mechanism takes over in the middle of the year. The EFSF`s effective lending capacity of 440 billion euros ($562.339 billion) has been guaranteed by the eurozone`s triple-A-rated countries, of which there are now only four: Finland, Germany, Luxembourg and the Netherlands. Klaus Regling, chief executive of the EFSF, said in a statement, "The downgrade to `double-A+` by only one credit agency will not reduce EFSF`s lending capacity of 440 billion euros. EFSF has sufficient means to fulfill its commitments under current and potential future adjustment programs until the ESM becomes operational in July 2012." He also stressed that the fund`s short-term rating was left unchanged at triple-A.