Standard and Poor’s stripped the Netherlands of its AAA credit rating today. This ignominy means that the Dutch, now rated merely AA+,
are considered less creditworthy than the Germans, on a par instead
with the Americans.Although considered part of the euro zone’s sturdy
northern “core,” the Dutch economy has performed more like the wobbly
southern “periphery” recently, with GDP set to shrink by 1.2% this
year, according to S&P. The size of the Dutch economy won’t surpass
its 2008 peak until 2017, reckons the ratings agency. Future growth
will be weighed down by aggressive government austerity and falling house prices.
Not
that any of this really matters. For widely held, extensively
scrutinized bonds like those issued by the Dutch government, the opinion
of one ratings agency doesn’t move markets much; Fitch and Moody’s,
the other two big agencies, still give the Netherlands the top grade.
Dutch bond spreads barely budged on the downgrade news, and continue to
fetch lower yields than fellow AA+ rated America (as does AA rated
France, for that matter).
Read more in Akmere-Digest
S&P also cut France’s rating earlier this month, to a notch below the Netherlands. Economist Holger Sandte of Nordea bank expects a gradual convergence of ratings
among euro members, driven by French and Dutch-style downgrades rather
than upgrades of lower-rated countries; Germany, Luxembourg and
Finland are now the only members of the 17-nation euro zone with the
top rating from all three leading credit agencies. S&P upgraded its outlook for Spain today, to “stable” from “negative,” but left its BBB- rating in place.
Read more in Akmere-Digest
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