Safe-haven credit ratings downgraded
Credit ratings agency Moody's recently lowered its outlook for Germany, the Netherlands and Luxembourg to negative. Could a fresh spate of downgrades be on the way?
Government bonds are getting riskier, not just in Greece, but also in "supposed havens", such as Germany, says Gillian Tett in the FT. Analyst Josh Rosner predicts German bond yields could soon rise as investors wake up to the costs of a eurozone bail-out.
Credit-rating agency Moody's this week changed its outlook for Germany, the Netherlands and Luxembourg, all AAA-rated, to negative. That's because of the increased likelihood of a Greek euro exit and the cost of extra support needed for Spain and Italy. France and Austria, also triple A-rated by Moody's, have been on negative outlooks since February.
Germany's finance ministry insists that the "very sound state of Germany's own economy and public finances remains unchanged". However, Markit's latest eurozone purchasing managers' index survey reveals that the downturn has pushed unemployment to its highest level for two and a half years and that Germany is not immune. "Germany is now contracting at the steepest rate for three years, while the rate of decline in the periphery is also among the highest seen since mid-2009," says Chris Williamson, chief economist at Markit.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Paul Donovan at UBS believes a series of actual sovereign downgrades are on the way. "If the euro survives (and we think that it will) there has to be a burden sharing that implies a lower credit quality for most of the high-rated states," he says. Yet if the euro does not survive, then the ensuing chaos means that no country should expect to "keep an AAA rating".
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
-
Are you one of 15 million people at risk of retirement poverty?
Two-fifths of people in the UK aren’t on track for a minimum lifestyle in retirement, new data shows. Are there steps you can take to boost your pension?
-
150 banking hubs now open across UK – is there one near you?
As the 150th banking hub opens its doors, a Post Office deal that offers basic banking services has also been extended until 2030. We explain what this means for you