The eurozone's rescue fund said Saturday that triple-As from all three rating agencies should help reassure investors
Snip ~ "If the Chinese, who have 60 percent of global reserves, decide to invest in the euro instead of the dollar, why refuse?" French President Nicolas Sarkozy said Thursday, hours after reaching a last-ditch deal over the EFSF"
October 29, 2011
EU rescue fund gets top rating hat trick boost
The eurozone's rescue fund said Saturday that triple-As from all three rating agencies should help reassure investors who had begun to question whether a just-reached debt crisis deal will really get to the root of the region's problems.
The across-the-board AAA rating came a day after the European Financial Stability Facility (EFSF) chief Klaus Regling was in Beijing courting Chinese investment to support the crucial bailout fund.
The highest possible rating was confirmed on the basis of amendments decided in July that took effect on October 18, bringing the fund's lending capacity to 440 billion euros ($622 billion), with a guarantee commitment of 780 billion euros, EFSF said in a statement.
The three agencies "affirmed the best possible credit rating," meaning AAA for S&P and Fitch and (P)Aaa for Moody's, the statement said two days after EU leaders decided in marathon talks on a complex plan to get Greece's debt under control and strengthen EU banks.
The EFSF's short-term rating was also the highest possible, at A-1+ for S&P, (P)P-1 for Moody's and F1+ for Fitch, the statement said.
"Confirmation of the highest possible credit rating shows the confidence in the strategy of the euro area to restore financial stability," Regling said in the statement.
Continues ...
S&P, reiterating the AAA rating on Friday, said assigning a stable outlook reflected the "almost certain" likelihood that EU governments would back the EFSF "in the event of financial distress."
But Fitch said that the 50 percent writedown of Greek debt held by banks -- another key facet of the deal -- could, despite claims to the contrary, see Greece ruled in default, possibly triggering a cascade of damage throughout the financial system due to the activation of default insurance contracts.
Europe is looking for funds to further increase the EFSF, set up in May 2010 and designed to provide financial assistance to European economies at risk of default, such as Greece, Ireland and Portugal.
Regling was in China Friday, looking for new ways to secure additional investment, speaking after EU leaders announced measures including boosting the firepower of the fund to one trillion euros.
"If the Chinese, who have 60 percent of global reserves, decide to invest in the euro instead of the dollar, why refuse?" French President Nicolas Sarkozy said Thursday, hours after reaching a last-ditch deal over the EFSF.
China, whose foreign exchange reserves -- valued at $3.2 trillion -- are the world's largest, was "interested in finding attractive, solid, safe investment opportunities," Regling told a media briefing.
But some analysts played down the prospect of China making a substantial investment.
"China's economy is slowing and they may well want a war chest to support their own economy," Julian Jessop, chief global economist at London research house Capital Economics.
China's vice finance minister said his country would wait for more details before committing to invest in the fund.
"We need to wait for the technicalities to be clear and also to carry out serious studies before we can decide on investment," Zhu Guangyao told reporters.
Regling's next stop is Japan, which on Friday offered vague promises that it will help Europe, but left itself a week to decide what it might do to expand its already hefty contribution to the EU's bailout fund.
Snip ~ "If the Chinese, who have 60 percent of global reserves, decide to invest in the euro instead of the dollar, why refuse?" French President Nicolas Sarkozy said Thursday, hours after reaching a last-ditch deal over the EFSF"
October 29, 2011
EU rescue fund gets top rating hat trick boost
The eurozone's rescue fund said Saturday that triple-As from all three rating agencies should help reassure investors who had begun to question whether a just-reached debt crisis deal will really get to the root of the region's problems.
The across-the-board AAA rating came a day after the European Financial Stability Facility (EFSF) chief Klaus Regling was in Beijing courting Chinese investment to support the crucial bailout fund.
The highest possible rating was confirmed on the basis of amendments decided in July that took effect on October 18, bringing the fund's lending capacity to 440 billion euros ($622 billion), with a guarantee commitment of 780 billion euros, EFSF said in a statement.
The three agencies "affirmed the best possible credit rating," meaning AAA for S&P and Fitch and (P)Aaa for Moody's, the statement said two days after EU leaders decided in marathon talks on a complex plan to get Greece's debt under control and strengthen EU banks.
The EFSF's short-term rating was also the highest possible, at A-1+ for S&P, (P)P-1 for Moody's and F1+ for Fitch, the statement said.
"Confirmation of the highest possible credit rating shows the confidence in the strategy of the euro area to restore financial stability," Regling said in the statement.
Continues ...
S&P, reiterating the AAA rating on Friday, said assigning a stable outlook reflected the "almost certain" likelihood that EU governments would back the EFSF "in the event of financial distress."
But Fitch said that the 50 percent writedown of Greek debt held by banks -- another key facet of the deal -- could, despite claims to the contrary, see Greece ruled in default, possibly triggering a cascade of damage throughout the financial system due to the activation of default insurance contracts.
Europe is looking for funds to further increase the EFSF, set up in May 2010 and designed to provide financial assistance to European economies at risk of default, such as Greece, Ireland and Portugal.
Regling was in China Friday, looking for new ways to secure additional investment, speaking after EU leaders announced measures including boosting the firepower of the fund to one trillion euros.
"If the Chinese, who have 60 percent of global reserves, decide to invest in the euro instead of the dollar, why refuse?" French President Nicolas Sarkozy said Thursday, hours after reaching a last-ditch deal over the EFSF.
China, whose foreign exchange reserves -- valued at $3.2 trillion -- are the world's largest, was "interested in finding attractive, solid, safe investment opportunities," Regling told a media briefing.
But some analysts played down the prospect of China making a substantial investment.
"China's economy is slowing and they may well want a war chest to support their own economy," Julian Jessop, chief global economist at London research house Capital Economics.
China's vice finance minister said his country would wait for more details before committing to invest in the fund.
"We need to wait for the technicalities to be clear and also to carry out serious studies before we can decide on investment," Zhu Guangyao told reporters.
Regling's next stop is Japan, which on Friday offered vague promises that it will help Europe, but left itself a week to decide what it might do to expand its already hefty contribution to the EU's bailout fund.