Finland: Moody's cuts Finland's last triple-A rating

Finland lost its last top-grade credit rating on Friday as Moody's downgraded it to Aa1 with a stable outlook, citing weak economic growth and its negative impact on the general government debt ratio.

Once known for prudent fiscal policy and innovation, the Nordic country's economy has underperformed its euro zone peers in recent years for reasons including high labour costs, the decline of Nokia's former phone business and a recession in neighbouring Russia.

"The economy is showing some signs of positive momentum with a return to positive growth in 2015 following three years of recession. However, growth over the next five years will remain weak," Moody's said in its report.

Fitch downgraded Finland to Aa+ with a stable outlook in March, while Standard & Poor's cut its rating for the country to AA+ in 2014, later giving the rating a negative outlook.

Long proud of its top grade ratings, Finland took a hard line against euro zone bailouts during the currency bloc's debt crisis.

This year, the European Commision expects Finland's economy to expand by 0.7 percent, less than any other EU country except Greece.

Read more: Moody's cuts Finland's last triple-A rating

Ireland gets fresh boost as Moody's removes junk rating

Moody's Investors Service upgraded Ireland to investment grade on Friday, handing the government a major post-bailout boost and opening its already sought-after debt to investors prohibited from buying junk-rated paper.

It is the latest in a run of good news for Ireland, which became the first euro zone country to complete a bailout, made a storming bond market return last week and has an economy that is picking up steam.

Moody's, which was the only rating agency to class Irish government debt as "junk", raised it to Baa3 from Ba1 with a positive outlook, citing the economy's growth potential and restored market access as the main drivers.

"They undertook the fiscal consolidation and structural reforms in the (bailout) program with great seriousness. It really was their determination to succeed that helped them to both regain and retain investor confidence," Kristin Lindow, Moody's analyst for Ireland, told Reuters.

Read more: Ireland gets fresh boost as Moody's removes junk rating - Yahoo Finance

Britain: Moody's Downgrades Britain: The Friday night drop - by Buttonwood

This Friday night drop was the old custom of PR men placing news stories in the grateful arms of Sunday newspaper financial editors. In return for an exclusive, they could usually guarantee a good press. Even the best PR man, however, would find it hard to spin Moody's decision to downgrade Britain from AAA to AA1, announced just before 10pm on a Friday night.

A lot of people thought the downgrade would happen at some point this year. Although the government had a bigger-than-expected surplus in January, it may well end up with a bigger deficit in 2012-13 than it did in 2011-12. The big spending cuts have yet to come. Austerity is planned not just for this Parliament but for the next. The economy is stuck in the doldrums, although at least unemployment has been falling. Moody's gives three reasons for the change.

"1, The continuing weakness in the UK's medium-term growth outlook, with a period of sluggish growth which Moody's now expects will extend into the second half of the decade;
2. The challenges that subdued medium-term growth prospects pose to the government's fiscal consolidation programme, which will now extend well into the next parliament;
3. And, as a consequence of the UK's high and rising debt burden, a deterioration in the shock-absorption capacity of the government's balance sheet, which is unlikely to reverse before 2016."

Downgrading Britain: The Friday night drop | The Economist

US Economy: Moody's threat to downgrade US debt is political, part of rightwing agenda, not fiscal - by Mark Weisbrot

Moody's threat this week to downgrade the US government's credit rating says a whole lot more about the credit rating agency than it does about the US debt situation. It is really a way of telling the world that Moody's is making a political statement, rather than an assessment of risk for investors who want actual information about US Treasury securities. This is really an embarrassment for Moody's – since they are supposed to be evaluating risk – although most of the media didn't seem to notice.

If you had to pick any sovereign bond in the world that has the least risk of default, it would have to be a US Treasury bond. Anyone who is holding bonds issued by the US government can be pretty sure that they will get their full interest payments and principal, if they hold it to maturity, unless there is some calamity as gigantic as a nuclear war. One reason is that the US has its own central bank and can simply create the money to pay bondholders, if necessary.

That is the main reason why, for example, the UK government is paying just 1.8% interest on its ten-year bonds right now, while Spain is paying 5.6% – even though the UK has a larger net government debt than Spain has. The UK has its own central bank and currency, so UK bondholders can be pretty sure that they will be paid. Spain, however, is at the mercy of the European Central Bank, an alien and sometimes hostile entity – one that, as we have seen in the case of Greece, may be more willing to drive a country into depression and default than to guarantee its debt. The European Central Bank could push down Spanish borrowing costs simply by making the appropriate guarantees, but it has so far refused to do so.

Moody's wants us to be scared of the federal debt, so as to advance a rightwing agenda. But what they are doing is making a good case for serious reform of the ratings agencies.

Read more: Moody's threat to downgrade US debt is political, not fiscal | Mark Weisbrot | Comment is free | guardian.co.uk

EU Outlook Cut by US based Moody’s on Germany, France, U.K. Risks

The European Union’s rating outlook was cut to negative by Moody’s Investors Service, reflecting the risks to Germany, France, the U.K. and the Netherlands that account for about 45 percent of the group’s budget revenue. 

The ratings company lowered the outlook on the EU’s Aaa long-term bond rating from stable, according to a statement released in Frankfurt late yesterday. It also changed to negative from stable its outlook on the provisional Aaa rating for the EU’s medium-term note program.

The change “reflects the negative outlook on the Aaa ratings of the member states with large contributions to the EU budget,” Moody’s said. “The creditworthiness of these member states is highly correlated, as they are all exposed, albeit to varying degrees, to the euro-area debt crisis.”

Read more: EU Outlook Cut by Moody’s on Germany, France, U.K. Risks - Businessweek

Canada: RBC, 14 other banks, downgraded by Moody's

Ratings agency Moody's Investor Service Thursday downgraded the credit ratings of Canada's biggest bank, the Royal Bank of Canada, and 14 other banks with global operations.

Moody's cut RBC's long-term deposit rating by two notches to Aa3, saying it faces a high probability of needing government support because of the exposure of its global investment banking operations to a possible financial crisis.

A downgrade usually means that it becomes more costly for banks to raise money by selling debt. Investors demand higher interest for riskier debt, which is what the downgrades represent.

Read more: RBC, 14 other banks, downgraded by Moody's - Business - CBC News

Moody's downgrades five Dutch banks

Moody's Investors Service has downgraded five Dutch banks, four of them by two notches, and warned a Greek exit of the euro would see further cuts.
The move kicks off a long-awaited round of downgrades for major European institutions.

Moody's set a stable outlook to the ratings for four of the groups but kept a negative outlook for ING Bank, meaning it could cut it again.

The downgrades will only add to pressure on European leaders to sort out the region's debt crisis, with a real test to the union coming this weekend as Greeks go to the polls. Moody's also warned that, were Greece to exit the euro, further ratings actions on European banks could well be needed.

The long-expected news had little immediate impact on financial markets in Asia, with the euro holding firm around $1.2616.  "Today's actions reflect Moody's view that Dutch banks will face difficult operating conditions throughout 2012 and possibly beyond," Moody's said in a statement.

Moody's agency said it had cut the ratings by two notches to Aa2 for Rabobank Nederland, to A2 for ING and ABN Amro, and to Baa2 for LeasePlan Corporation.

EU-Digest

France's Credit Rating Change Not Imminent, Moody's Says - by Mark Deen

France’s sovereign credit rating may not be subject to an imminent change, Moody’s Investors Service said. 

Moody’s placed France on “negative outlook” on Feb. 13, adding that it retains its Aaa credit rating. Socialist presidential candidate Francois Hollande said yesterday that he expects Moody’s to act on that outlook on May 12, six days after the final round of this year’s presidential election.

“The negative outlook on this rating doesn’t signal any imminent change but constitutes an indication of the probable evolution in the next 12 to 18 months,” Moody’s said today in an e-mailed statement in response to Hollande.

For more: France's Credit Rating Change Not Imminent, Moody's Says - Businessweek

Moody’s cuts ratings on Italy, Portugal, Spain; outlook ‘negative’ for France, Austria, UK

Ratings agency Moody’s Investor Service on Monday downgraded its credit ratings on Italy, Portugal and Spain, while France, Britain and Austria kept their top ratings but had their outlooks dropped to “negative” from “stable.”

Moody’s also cut its ratings on the smaller nations of Slovakia, Slovenia and Malta. All nine countries are members of the European Union.

The agency said it took the actions due to the uncertainty over EU financial reforms, the region’s weak economic outlook and the resulting pressure on fragile markets.

For more: Moody’s cuts ratings on Italy, Portugal, Spain; outlook ‘negative’ for France, Austria, UK - The Washington Post

EU - Moody's on Monday went against S&P and kept its triple-A rating on France unchanged

The European Commission has claimed it has secret information about the positive state of EU countries' finances, following a shock downgrade of core member states.

Commission spokesman Olivier Bailly made the statement at a regular press briefing in Brussels on Monday (16 January), two days after US-based agency Standard & Poor's downgraded nine EU countries, including France.

"We have more information than the ratings agencies and we think there are elements missing in their analysis ... We have monthly updates from member states. We share this information on a confidential basis. The ratings agencies do not have this information," he said. Bailly noted the S&P decision was "very odd as far as timing is concerned ... indeed [it was] a strange timing."

Whether or not his comments reassure investors remains to be seen. But rival ratings agency Moody's on Monday went against S&P and kept its triple-A rating on France unchanged.

For more: EUobserver.com / Economic Affairs / EU commission: 'We know better than ratings agencies'

Moody's maintains Denmark rating at Aaa

Denmark retains its Aaa credit rating, but its long-term growth prospects are a cause for concern, ratings agency Moody's said late Thursday.

"The government's top-notch ratings reflect Denmark's stable macroeconomic and political environment and relatively healthy government balance sheet," Moody's said in a statement. It added that Denmark's rating outlook remains "stable."

The triple-A rating, the highest possible, appears to confirm Denmark's status as a relatively better economic performer during the ongoing European debt crisis.

For more: Moody's maintains Denmark rating at Aaa - Xinhua | English.news.cn

US Economy - Government Debt Might Reduce U.S. Triple AAA Credit Rating, Warn S&P, Moody’s Credit Rating Agencies | Staho.com

On Thursday two major credit rating agencies, Standard & Poor’s and Moody’s Investors Service, warned that the U.S. might lose its triple AAA credit rating if its government debt Keeps growing.
The two separate statements, made within hours of each other, were seized as further evidence that the U.S. must reduce spending and debt to avoid disaster.

On the other hand, many economists say the reckoning, if there will be one, is still years or even decades away. The bond market was not affected by Thursday’s news. However, while some experts who want to see the deficit reduced argue now is not the time to cut federal spending given the weak economy and high unemployment, others fear the mounting government debt.

In a quarterly report on the nation’s credit risk, Moody’s Investors Service said the probability of revising is outlook on its triple AAA rating for the United States – from stable to negative – within the next couple of years is increasing. This would not actually reduce the credit rating, but even a small revision would likely rattle financial markets and might even limit America’s ability to borrow the money necessary for financing its deficit. Moody’s has been rating U.S. government debt since 1917, and has always rated it triple AAA.

For more: Government Debt Might Reduce U.S. Triple AAA Credit Rating, Warn S&P, Moody’s Credit Rating Agencies | Staho.com