The Straits Times
Published on Sep 04, 2012

Moody's downgrades EU rating outlook to 'negative'


NEW YORK (AFP) - Moody's on Monday lowered the European Union's (EU) long-term issuer rating outlook from stable to negative, saying the move reflected the negative outlooks of the bloc's key budget contributors.

"It is reasonable to assume that the EU's creditworthiness should move in line with the creditworthiness of its strongest key member states," it said, citing negative outlooks for Britain, France, Germany and the Netherlands.

Moody's maintained the EU's triple-A rating, saying its "two key rationales" for assigning the bloc its highest rating remained unchanged: its "conservative budget management" and "the creditworthiness and support provided by its 27 member states". Britain, France, Germany and the Netherlands - which together account for about 45 per cent of the EU's budget revenue, according to Moody's - also maintain a AAA credit rating.

The agency, however, did not exclude the possibility of a future EU downgrade, saying in its statement that a "deterioration in the creditworthiness of EU member states" could prompt such a move.