Belgium's credit rating cut by two notches

Saturday 17 December 2011 08.04
Moody's cuts Belgium's credit rating by two notches
Moody's cuts Belgium's credit rating by two notches

Moody's has cut Belgium's credit ratings by two notches to Aa1, saying "fragile sentiment" in the euro zone increases funding risks for countries with high public debt burdens.

The credit ratings agency said concerns about Belgium's economic growth prospects and its banking system, particularly the potential contingent liabilities stemming from a bailout of Dexia bank, also contributed to the decision.

In a statement, it said "the fragility of the sovereign debt markets in the euro zone is increasingly entrenched and unlikely to be reversed in the near future."

It added that "it translates into heightened potential for funding stress for euro area countries with high public debt burdens and refinancing needs like Belgium."

Belgium's government declined to comment on Moody's decision.

Earlier, the credit ratings agency Fitch said it believes a comprehensive solution to the crisis in the eurozone is technically and politically beyond reach.

The agency has announced it is reviewing the credit ratings of six eurozone countries, including Ireland, Spain and Italy.

The agency kept France's triple AAA rating, but changed its outlook to "negative", meaning there is a possibility of a downgrade.