Professional Documents
Culture Documents
Credit Agencies Criticised - BBC
Credit Agencies Criticised - BBC
Commission
"[This] shows there may be some bias in the markets when it comes to the evaluation of
specific issues of Europe," he said.
'Self-fulfilling prophecy'
Earlier, Mr Lambridinis told a conference in Berlin that the agencies had exacerbated an
already difficult situation.
He told the conference that Moody's decision to downgrade Portugal's rating was not based
on any failure to implement economic reforms.
He said Moody's made an "assumption that Portugal would need a second bail-out", a move
that had "the wonderful madness of self-fulfilling prophecy" - because it made it harder for
Portugal to borrow to keep afloat.
Portugal's downgrade has led to the yield on its 10-year bonds exceeding 11%. German 10year bonds - deemed the safest in the eurozone - have a yield of about 3%.
Avoiding default
Greece and Portugal - with the Irish Republic - are the eurozone countries whose finances are
so weak that they have received assistance from the European Union (EU) and the
International Monetary Fund (IMF).
Greece is currently in the process of negotiating a second bail-out. Rating agencies are
watching this closely, as commercial lenders are discussing how they can contribute to the
bail-out.
Later on Wednesday, senior executives from European lenders will hold a meeting to discuss
how to agree repayment terms which would fulfil both their need for repayment and Greece's
need to access funds.
The agencies have voiced doubts that this can be done without them declaring that Greece
has defaulted on its debts.
That would spark a round of write-downs of Greek debts held by state and commercial banks,
potentially causing mayhem on the financial markets.