Adjusting European Sovereign Ratings to Better Capture Credit Susceptibility to Downside Risks

Our decision to adjust the ratings of nine European sovereigns reflects the continued pressure on their creditworthiness emanating primarily from (i) the continued uncertainty surrounding the prospects for institutional reform of the euro area’s fiscal and economic framework, (ii) the weak macroeconomic outlook across the region, and (iii) the resulting pressure on already fragile market confidence. However, the limited magnitude of our rating adjustments reflects the gradual progress that European policymakers have made in agreeing to and implementing reforms, and their demonstrated commitment and desire to resolve the underlying fundamental macroeconomic and fiscal imbalances.

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№2(63), 2012