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The chief executive of the euro zone's rescue fund, the European Financial Stability Facility (EFSF) said on Tuesday that Standard & Poors downgrade of its creditworthiness won't hamper its lending capacity, according to media reports.
Klaus Regling, chief executive officer of the facility, said the downgrade wont hamper its capacity of 440 billion euros (557 billion U.S. dollars).
EFSF has sufficient means to fulfill its commitments under current and potential future adjustment programs until the ESM becomes operational in July 2012, he said in an e-mail, referring to the permanent European Stability Mechanism.
Citing the efforts to combat the regions debt crisis are falling short, S&P cut the credit ratings of the European Financial Stability Facility, which is designed to fund rescue packages for Greece, Ireland and Portugal to AA+ from AAA.
S&P said in a statement the decision was all but inevitable following identical cuts three days earlier to the creditworthiness of France and Austria, two of the EFSF's guarantors.
"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," the agency said in a statement.
"We have therefore lowered to AA+ the issuer credit rating of the EFSF, as well as the issue ratings on its long-term debt securities."
The EFSF was set up by the 17 governments that share the European single currency in May 2010. Germany, France, the Netherlands, Finland, Austria and Luxembourg were the top-rated nations backing the fund.
S&P stripped France and Austria of their top ratings on Jan. 13 and cut seven other euro countries in a move that left Germany with the blocs only stable AAA grade.
S&P said on Monday that if the EFSF adopts enhancements sufficient to offset its now-reduced creditworthiness, it would likely raise the rating to AAA.
S&Ps downgrades ignored Europes progress in fiscal consolidation, said the European Commission on Monday.
EU forecasts show the euro areas aggregate deficit will fall to 3.4 percent of gross domestic product in 2012 from 4.1 percent in 2011, spokesman Olivier Bailly said in Brussels.
German Chancellor Angela Merkel said the rating companys criticism of insufficient policy steps reinforced her view that leaders must redouble efforts to resolve the crisis.
"The EFSF has kept intact its ability to lend, with enough means and guarantees to fulfill the full range of its present and future commitments," said French Finance Minister Francois Baroin in a statement. "There is therefore no need to act on the EFSF at the moment." |
