Belgium’s credit rating was cut two levels to Aa3 by Moody’s Investors Service, which said rising borrowing costs, slowing growth and liabilities arising from Dexia SA’s breakup threaten to inflate the euro area’s fifth- highest debt load.
Moody’s lowered Belgium’s debt rating to the fourth-highest investment grade, from Aa1, with a negative outlook, the ratings company said today in a statement. The action follows Standard & Poor’s one-step downgrade of Belgium to AA on Nov. 25. Fitch Ratings put Belgium’s AA+ on review for a downgrade today.
Belgium’s downgrade comes a week after European Union, in their fifth attempt to end the debt crisis now in its third year, agreed to forge a tighter fiscal union as the main thrust of their efforts, even as the European Central Bank resisted investor calls to step up its bond-buying program. Fitch also lowered France’s rating outlook today and put the grades of nations including Spain and Italy on review, citing Europe’s failure to find a “comprehensive solution” to the debt crisis.
“The funding environment is an additional risk that we have in this environment,” Alexander Kockerbeck, a senior credit officer at Moody’s, said in a telephone interview from Frankfurt. “The risk is that things can change relatively quickly in the funding market as we have seen in the recent past. The shift in market sentiment can change quickly in this environment.”
