Moody's cuts AAA rating of ESM rescue fund
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WASHINGTON, Nov 30 AFP
December 01 2012, 09:20AM
Moody's has cut the triple-A rating of the European Stability Mechanism euro rescue fund by one notch and given it a negative outlook, citing its earlier downgrade of key ESM backer France.
The French downgrade on November 19 "reflects the rating agency's view that there has been a marginal diminution in the certainty that the sovereign will fulfill its financial obligations" including its commitment to support the ESM.
Moody's on Friday put the ESM's new rating at Aa1, and also cut the ESM predecessor, the European Financial Stability Facility, to a "provisional" Aa1 from provisional Aaa, for the same reason.
"The credit risks and ratings of the ESM and the EFSF are closely aligned to those of its strongest supporters," Moody's said.
"France is the second largest contributor to the two entities' financial resources, as a provider of callable capital in the case of the ESM and as a guarantor country in the case of the EFSF."
Germany is the largest backer of the two mechanisms, and its credit rating remains at the top-level Aaa.