May 6, 2024

S.&P. Cuts Belgium’s Rating to AA

PARIS — Standard Poor’s lowered its rating on Belgium’s sovereign debt on Friday, the latest in a string of downgrades issued this week on European countries and banks that have been hit by the European debt crisis.

The downgrade, to AA from AA-plus, came just days after ratings agencies also signaled that France’s triple-A credit rating could eventually be at risk as the crisis spreads to the euro zone’s largest countries.

Belgium has been without an elected government for the last 19 months, and the government recently agreed to split a multibillion-euro bill with France for the bailout of Dexia, a French-Belgian bank that last month became the first European bank to be partly nationalized in the euro crisis.

S. P. said it was concerned about the ability of Belgian authorities to respond to potential economic pressures from inside and outside the country. A caretaker government has tried to improve the nation’s finances, but the lack of solid leadership may make it harder for Belgium to undertake deeper fiscal and structural reforms, the agency said.

“The announcement by Standard Poor’s reinforces further the necessity to finalize the 2012 budget in a very brief period,” Didier Reynders, Belgium’s finance minister, said in a statement.

The leader of Belgium’s French-speaking socialist party, Elio Di Rupo, tendered his resignation to King Albert II of Belgium on Monday after talks for a 2012 budget ground to a halt.

The government may also have to put up more money to support its financial sector as Belgium’s banks find it more difficult to obtain credit in the open market, S. P. said. In particular, Belgium may find itself facing a taxpayer bill for Dexia of about 90 billion euros, or around 24.5 percent of the nation’s gross domestic product, at the end of 2011, S. P. said.

On Thursday, agencies lowered the ratings of Portugal and Hungary to junk.

Article source: http://feeds.nytimes.com/click.phdo?i=abde5d37e2a8fa5444613de22edf2510