More downgrades are hitting Europe today by the credit ratings agencies. Today’s downgrades are not in the PIIGS as we have become so accustomed to. Instead of bashing Portugal, Ireland, Italy, Greece, or Spain, Egan-Jones has come out and downgraded The Netherlands and Austria.
- The Kingdom of the Netherlands was downgraded to “A” from “AA-” in the research call.
- The Republic of Austria saw its prior “A+” rating get cut down to a rating of “A” in this credit rating downgrade.
We have warned that the PIIGS will face more downgrades ahead, and the bad news does not likely stop there. Our take is that all of Europe is at risk. As the developed and wealthier European nations back away from austerity and consider taking on more and more of a burden for the lower rated countries in the Euro Zone, how could there not be further downgrade cycles?
This trend of downgrades is just feeling like it is going away any time soon. As the nations in the world continue choking on more and more debt at lower and lower growth rates, further downgrades seem to be an easy expectation.
Egan-Jones describes itself: “Egan-Jones Ratings is an independent NRSRO and not paid by corporations issuing bonds. Our only mission is to assist our buy-side institutional clients through accurate, risk averse, market sensitive credit ratings with predictive value. Clients will take care of the rest.”
JON C. OGG