15 MAR 2011
By Rainer Buergin and David Tweed | Bloomberg
Luxembourg’s Jean-Claude Juncker, who chairs the group of euro-area finance ministers, said he is “not happy” about the role played by credit-rating companies in Europe’s sovereign-debt crisis, particularly in the case of Spain.
“In the U.S., people are saying that financial markets would not always be best advised to follow the assessments given by the rating agencies,” Juncker told reporters yesterday in Brussels, where he chaired a meeting of finance chiefs. “As far as this very point is concerned, I’m very American.”
Moody’s Investors Service lowered Spain’s credit rating to Aa2 on March 10, saying Spanish lenders will need as much as 50 billion euros ($70 billion) to meet new capital requirements, more than double the 20 billion euros seen by the government in Madrid. Juncker said it is “surprising” that Moody’s didn’t wait to see the Bank of Spain’s assessment of lenders’ capital shortfall, which was due on the same day, before downgrading the nation’s credit rating.
French Finance Minister Christine Lagarde said the ratings downgrade is being studied as an example of problems with how rating agencies work. “The fact that the downgrade came within a few hours of that statement prompted a rejection of the way they’re operating,” she said yesterday in Brussels. The European Union wants to set new rules for the timing and justification of such ratings changes, she added.
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Eurozone finance ministers issue new warning against credit rating agencies