The world's top rating agencies today awarded their 'AAA' top credit score to Europe for its part in a €750 billion backstop fund set up to help struggling euro zone economies.
Moody's Investor Service, Fitch Ratings and Standard & Poor's each issued the same rating for a European Union fund, which has yet to be tapped.
Moody's said the provisional rating for a European Union fund was based on a series of conditions that would each have to be met.
These were: the 'irrevocable and unconditional guarantees by the participating states,' the European Financial Stability Fund's 'cash reserve and the loan-specific cash buffer' plus the 'creditworthiness of the participating 'AAA' euro zone member states and their firm commitment' to the fund.
Fitch Ratings spelled out that the €440 billion of 'unconditional and irrevocable' sovereign guarantees initially announced in May would fall to €428 billion as Greece, which has a 'BBB-' rating, had 'stepped out' as a guarantor.
Standard & Poor's said its rating was based on assurances leading it to 'believe that the guarantees from member governments supporting the repayment of EFSF obligations will be unconditional, irrevocable, and timely, and thereby consistent with our criteria for sovereign guarantees."
'We consider the EFSF to be the cornerstone of the EU's strategy to restore financial stability to the eurozone sovereign debt market,' S&P said.
Matched funding that could be disbursed between now and the summer of 2013 in the event of a euro zone state other than Greece requiring assistance would come from the International Monetary Fund and borrowings by the European Commission.
Brussels warned this month of 'lingering tensions in sovereign-debt markets' at home as weighing down on economic recovery as Europe braces itself for the impact of a 'soft patch' in global demand.
The commission said in forecasts for economic growth this year that despite a 'partial recovery' since the emergency facility was agreed, the reality remains 'tenuous, and adverse effects on bank credit provision to the economy cannot be ruled out'.
However, Fitch insisted that its rating would remain 'robust to the potential failure of one or more borrowers to make scheduled repayments' and also that it would take more than the 'unlikely event that non-'AAA' rated EU guarantors also fail to meet their share' for its rating to be cut.
