tommy271
Forumer storico
EU, IMF back Greece in rating agency battle
The European Commission has backed Greek officials in questioning the way that rating agencies operate while the International Monetary Fund expressed concern about market panic caused by their actions.
The comments come after Standard & Poor’s downgraded Greece and Portugal on Tuesday, in decisions that put extra pressure on policymakers to stem the debt turmoil that led to the bailouts of Greece and Ireland. Moody's and Fitch have also downgraded European Union members in the past.
The IMF said in a report that sovereign rating announcements in Europe have significant spillover effects in the region, revealing their potential to stir financial instability.
Cuts to levels near the lowest investment grade for “relatively large economies” such as Greece have had a systematic impact on other countries sharing the euro, IMF economists said in a study released late on Tuesday.
The European debt crisis “has been the theater of sovereign credit rating downgrades, widening of sovereign bond and credit default swap spreads, and pressures on stock markets,” the report said.
“Interestingly, financial markets throughout the euro area have been under pressure although credit rating actions were concentrated in few countries such as Greece, Iceland, Ireland, Portugal and Spain,” the study said.
European officials have criticized credit rating companies for making rating changes just as Europe’s debt crisis was unfolding, exacerbating market turmoil.
The European Commission, the 27-nation EU’s executive arm, has said that it will make proposals by September to toughen regulation of the credit rating companies and increase competition.
On Wednesday, the Commission said it had some doubts and concerns about how credit rating agencies function but did not comment on the individual credit ratings of countries.
It said that Greece was doing all it could to implement a fiscal adjustment program agreed with the European Union and the IMF and «things are going well."
The comments from Brussels follow an angry reaction from Greek officials to the S&P downgrade on Tuesday that pushed its the rating on Greek bonds deeper into junk territory on fears that the country will restructure its debt and force losses on bondholders after 2013.
Prime Minister George Papandreou accused credit rating agencies of spreading panic in the markets.
“We have seen the ratings agencies go from the bubble of euphoria to the panic of risk,” he said.
“Only two years ago they were rating AAA all the toxic bonds that created the crisis.”
In March, 10 members of Parliament from Greece’s ruling Socialist party signed a petition urging the government to take legal action against Moody’s, claiming the agency had deliberately intended to weaken the country’s negotiating position ahead of an EU summit by downgrading Greek bonds.
ekathimerini.com , Wednesday March 30, 2011 (15:31)
The European Commission has backed Greek officials in questioning the way that rating agencies operate while the International Monetary Fund expressed concern about market panic caused by their actions.
The comments come after Standard & Poor’s downgraded Greece and Portugal on Tuesday, in decisions that put extra pressure on policymakers to stem the debt turmoil that led to the bailouts of Greece and Ireland. Moody's and Fitch have also downgraded European Union members in the past.
The IMF said in a report that sovereign rating announcements in Europe have significant spillover effects in the region, revealing their potential to stir financial instability.
Cuts to levels near the lowest investment grade for “relatively large economies” such as Greece have had a systematic impact on other countries sharing the euro, IMF economists said in a study released late on Tuesday.
The European debt crisis “has been the theater of sovereign credit rating downgrades, widening of sovereign bond and credit default swap spreads, and pressures on stock markets,” the report said.
“Interestingly, financial markets throughout the euro area have been under pressure although credit rating actions were concentrated in few countries such as Greece, Iceland, Ireland, Portugal and Spain,” the study said.
European officials have criticized credit rating companies for making rating changes just as Europe’s debt crisis was unfolding, exacerbating market turmoil.
The European Commission, the 27-nation EU’s executive arm, has said that it will make proposals by September to toughen regulation of the credit rating companies and increase competition.
On Wednesday, the Commission said it had some doubts and concerns about how credit rating agencies function but did not comment on the individual credit ratings of countries.
It said that Greece was doing all it could to implement a fiscal adjustment program agreed with the European Union and the IMF and «things are going well."
The comments from Brussels follow an angry reaction from Greek officials to the S&P downgrade on Tuesday that pushed its the rating on Greek bonds deeper into junk territory on fears that the country will restructure its debt and force losses on bondholders after 2013.
Prime Minister George Papandreou accused credit rating agencies of spreading panic in the markets.
“We have seen the ratings agencies go from the bubble of euphoria to the panic of risk,” he said.
“Only two years ago they were rating AAA all the toxic bonds that created the crisis.”
In March, 10 members of Parliament from Greece’s ruling Socialist party signed a petition urging the government to take legal action against Moody’s, claiming the agency had deliberately intended to weaken the country’s negotiating position ahead of an EU summit by downgrading Greek bonds.
ekathimerini.com , Wednesday March 30, 2011 (15:31)