Moody’s:US,UK,France,Germany ‘Distance to Dwngrade’ Reduced

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  1. Pepe

    Pepe Senior Member

    Jun 3, 2010
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    WASHINGTON (MN) – The United States, the United Kingdom, France and
    Germany’s “distance to downgrade has been further reduced” in light of
    their ongoing fiscal challenges, Moody’s’ warned Tuesday in its
    quarterly review of triple-A rated sovereign countries.

    That said, those countries remain “well positioned based on a
    forward-looking assessment of their debt dynamics and debt
    affordability,” Moody’s said in its “Aaa Sovereign Monitor.”

    The rating agency is now noting that the largest triple-A rated
    European countries have already started implementing fiscal tightening,
    closing the debate on the timing of fiscal consolidation.

    “In the U.S., a strategy for debt stabilization is still in the
    early stages of being developed,” Alexander Kockerbeck, Vice President
    and Senior Credit Officer in Moody’s Sovereign Risk Group.

    So overall, the challenges have slightly shifted from a few months
    ago, with Moody’s highlighting growth revival as the first challenge
    given that fiscal tools are no longer “effectively” at the countries’

    Moody’s hence expects a shift to micro-economic policies to
    stimulate growth, such as labor supply — therefore output —

    “The second challenge is to regain or preserve access to affordable
    funding through credible medium-term fiscal adjustment programmes,”
    Kockerbeck said.

    That necessary — albeit not sufficient — prerequisite is
    especially true for Europe “to maintain control over debt dynamics.”

    Third, Moody’s stressed the need to address medium- and long-term
    fiscal challenges — particularly those resulting from the ageing of
    their populations– quicker.

    The analyst noted indeed that “a further consequence of the crisis
    is the reduced time available for governments to confront” those


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