Bailouts have suddenly become a whole lot more expensive. The eurozone bailout fund was downgraded one notch to AA+ by S&P. This fund relies on a triple A rating to raise cash in debt markets, cash which it then lends to debt-ridden euro nations at a small markup.
S&P said the fund could be shored up thus giving them a shot at an uptick in their rating. Unfortunately, the German Prime Minister has already said no to shoring up the fund and China has no interest.
Ratings analysts have long said that the fund lacks the firepower to assure financial markets that much larger eurozone economies, such as Spain and Italy, could be protected if the crisis deepened. That’s because it can’t.
Read more: FT