"The
Euro Zone debt crisis has certainly kept the credit rating agencies busy in the
news headline. On Friday, 16 Dec. Moody's downgraded Belgium's credit rating by
two notches to Aa3 with a negative outlook, citing concerns over soaring
borrowing costs, economic growth as well as the health of Belgium's banking
sector after the
demise of Dexia.
Fitch
Ratings also lowered France’s credit outlook and put Spain and Italy, alongside
Ireland, Belgium, Slovenia and Cyprus, on downgrade review, citing Europe’s
failure to find a “comprehensive solution” to the debt crisis. S&P
already on 5 Dec. placed the ratings of 15 euro nations on review for possible
downgrade, including six AAA rated countries Moody’s also noted on 12 Dec. that
it will review the ratings of all euro countries in the first quarter of
2012.
All
these downgrades and rating warnings are not only putting further pressure on
the debt crisis now going on for 2+ year, but is also sharpening the picture of
a possible breakup of the Euro Zone.
MarketWatch reported that
the latest monthly survey of about 200 major institutional investors with about
$600 billion under management.by Merrill Lynch/Bank of America Securities
revealed that nearly half of all institutional money managers now fear a partial
break-up of the euro zone. Investment houses like Merrill Lynch and Barclays
Capital have in recent weeks issued various reports discussing that very
scenario as “The euro zone financial crisis has entered a far more dangerous
phase,” lamented analysts at Nomura.
The
Telegraph published a graphic depiction of the effects on European exchange
rates of a Euro break-up forecast by ING that sees an immediate fall
in individual currencies in 2012. (See Charts Below)..."
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Chart Source: The
Telegraph, 16 Dec. 2011
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