Fears of downgrade for top-rated eurozone countries threaten to undo leaders' efforts
RATINGS agency Standard and Poor's could cut the rating of all of the eurozone's remaining top AAA-rated countries.
Last night, the rating agency put Germany, France, the Netherlands, Austria, Finland, and Luxembourg, on "credit watch negative". It means there is a 50:50 chance of a ratings downgrade.
The agency had warned all six AAA-rated governments that their credit ranking would be cut if analysts thought their balance sheets were not strong enough to cope with the strain of supporting the rest of Europe through the bailout.
Losing any of the AAA ratings would be a huge blow to the efforts to end the eurozone debt crisis.
Guarantees from the six AAAs underpin the ability of the €440bn European rescue facility to borrow in the markets.
That, in turn, is the source of bailout loans for Ireland and other countries receiving aid.
There was better news for Ireland on ratings, however.
In an interview with Dow Jones, Fitch ratings director Chris Pryce said he thought the Irish economy was set for further growth. It's a sign Fitch will keep its Ireland rating unchanged at BBB, which is investment grade.
However, the real news last night was around the S&P downgrade fears. The rating agency is understood to have warned all six governments that they are at risk because of the slow response in tackling the debt crisis.
France and the UK have long been seen to be at risk of losing their AAA status, because of ballooning debts, but the threat to Germany stunned investors.
The news broke after the debt market shut last night, and threatens to undo a rally in government bonds that lifted Italy and Spain out of the danger zone yesterday.