Germany targeted by Moody’s to lose their Aaa credit ranking
Moody’s cut the outlook on Germany’s prized AAA credit rating from “stable” to “negative” Monday. The move could precede a full-blown downgrade, which would mark a grim turn for a country long thought of as a bulwark of financial stability in Europe.
Eurozone map photo/Economic and Monetary Union of the European Union wikimedia commons
The German government has downplayed the decision as the Finance Ministry noted in a statement late Monday that Moody’s Investors Service had kept Germany’s AAA credit rating, the highest possible.
But Moody’s had also lowered the outlook for Germany, the Netherlands and Luxembourg, citing the mounting uncertainty over the debt crisis in Europe and the possibility that those stronger countries would have to provide aid to Spain or Italy.
The government said the risks cited by Moody’s weren’t new and were largely based on a short-term assessment.
It said Germany “remains in a very solid economic and financial situation.”
The possibility of a Greek exit from the euro, Moody’s said, could threaten banks throughout the eurozone. German banks also have significant exposure to other struggling countries on the continent, particularly Italy and Spain, the agency added.
Even if the monetary union remains intact, Moody’s said Germany, as the eurozone’s largest economy, will likely bear an increased financial burden as further bailout funds are required.
“We reiterate our strong commitment to ensure the stability of the euro area as a whole,” said Eurogroup president Jean-Claude Juncker, following Moody’s actions.
