RATINGS-EFSF-SP:S&P revises EFSF outlook to negative
NEW YORK (Reuters) - Standard & Poor's revised its outlook on the European Union's bailout facility to negative on Monday, pointing to the reduced creditworthiness of some of the countries backing it.
S&P reaffirmed the European Financial Stability Facility's long-term AA+ rating, but the move to a negative outlook from a developing one means the agency could cut the rating within the next two years. It cut the EFSF rating from AAA in January.
S&P said it doubted it would see credit enhancements for the facility and said the negative outlook "mirrored" the same outlooks of EFSF guarantors France and Austria. S&P stripped both of those countries' top AAA status earlier this year.
"Absent additional credit enhancements, we could lower the ratings on the EFSF if we lowered the long-term sovereign credit ratings on any of the EFSF's AAA or AA+ rated members to below AA+," S&P said in a statement.
In addition to France and Austria, those guarantors include Germany, the Netherlands, Finland and Luxembourg.
The EFSF was created by euro zone states in 2010 to provide emergency loans to countries in financial difficulties. Its effective lending capacity of 440 billion euros depends on the guarantees of the euro zone's AAA or AA+ rated members.
(Reporting by Steven C. Johnson; Editing by James Dalgleish)