Update, 16:05: This story is evolving since the ratings agencies do not immediately release the names of the downgraded countries. France was downgraded by S&P today from AAA to AA+. Austria was cut to AA+ with a negative outlook. Portugal, Italy, Spain and Cyprus were cut by two notches and Malta, Slovakia and Slovenia by one notch each. Portugal was cut to junk status and Italy was cut to BBB+, on a level with Kazakhstan. A total of nine nations were downgraded. Ireland will not be downgraded by S&P.
Fourteen euro zone states were put on negative outlook for a possible further downgrade, including France, Austria, Finland, the Netherlands, and Luxembourg.
Austria’s problem is its trading partners – Italy and Hungary.
Germany and Slovakia are the only countries without a negative outlook according to S&P.
The France downgrade presents a significant political & economic problem for Sarkozy who will face off with a Socialist challenger this year.
Fitch warned that it is considering a downgrade of France, Belgium, Cyprus, Ireland, Italy, Slovenia and Spain.
The magic number for cutting ratings is an 80% public debt of GDP. The U.S. is 70% to 100% depending on whether or not you include unfunded liabilities such as social security.
Original Story, 11:07: S&P will downgrade some European nations to AA+ today and they will likely to include France, Austria, and England. Germany and the Netherlands probably will avoid a downgrade for now.
The downgrade means they will be borrowing at higher rates, thereby increasing their debt and deficit problems.
Last month, the credit agency put 15 of the 17 nations on alert.
I don’t know what took the ratings agencies this long. Read more: Business Insider