New York, January 16, 2012
By John Stephenson

Italy and Spain were also among the nine countries to see their ratings lowered by the influential ratings agency.  Finland, the Netherlands and Luxembourg kept their AAA ratings, however, they were put on negative watch for a possible future downgrade.  In a statement released Friday, Standard & Poor’s said “In our view, the public initiatives taken by European policy makers in recent weeks may be insufficient to fully address ongoing systemic stresses in the euro zone.”

An open and prolonged dispute among European policy makers, tightening credit, slowing economic growth and rising risk premiums are just some of the reasons why Standard & Poor’s acted.

The downgrade of the credits of many of the euro zone countries came after a week in which the region seemed to be making progress on backing away from the precipice.   Borrowing costs had fallen for the region and the European Central Bank said it had prevented a credit crunch by providing funding for European banks.  The first gauge of the impact of the downgrades will be known soon as France is set to sell as much as 8.7 billion euros in bills.

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