Fitch Cuts European Rescue Loan Fund to AA+

Fitch Ratings has cut its credit grade for the European fund that provides rescue loans to Greece, Ireland and Portugal.

The agency said Monday it lowered the rating for the European Financial Stability Facility (EFSF) by one notch from AAA to AA+ as a result of its downgrade of France last week. The EFSF’s creditworthiness depends on that of the countries that provide its financing, which includes France.

“Following the downgrade of France’s IDR (issuer default rating), the EFSF’s long-term debt issues are not fully covered by ‘AAA’ guarantees and over-guarantees and, for debt issued before October 2011, by the cash reserve,” Fitch said in a statement.
Monday’s downgrade of the EFSF means the fund could have to pay higher interest rates to raise money. Fitch’s rivals Standard & Poor’s and Moody’s have already downgraded it.

via CNBC

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