Today, the Standard & Poor’s declared that it officially has downgraded many European states in terms of credit rating.
Most notably, France fell one rating from AAA to AA+. Also falling by one rating notch was Austria, Slovenia, Slovakia, and Malta. Cyprus, Italy, Spain, and Portugal all fell two rating notches. This left Italy at a credit level of BBB+, which is very close to the level of a junk bond.
The Netherlands, Luxemburg, Germany, and Finland were all unaffected and stayed at their longstanding AAA levels.
It is unexpected how the rating drops will affect the European market and the economies of the effected states. This could potentially cause investors to stay away from those states and could increase the need to borrow money for those 9 states.
Standard & Poor’s announced that “Today’s rating actions are primarily driven by our assessment that the policy initiatives that have been taken by European policymakers in recent weeks may be insufficient to fully address ongoing systemic stresses in the Eurozone.”
The S&P then said that European states are still in danger of more downgrading as there have still been few notable improvements in the European economy despite great problems needing fixing.