WASHINGTON (MNI) – The following is the full statement related to
Standard & Poor’s action Monday on the sovereign ratings of all 17
Eurozone nations:

Standard & Poor’s Ratings Services today placed its long-term
sovereign ratings on 15 members of the European Economic and Monetary
Union (EMU or eurozone) on CreditWatch with negative implications.

We have also maintained the CreditWatch negative status of our
long-term rating on Cyprus and placed its short-term ratings on
CreditWatch with negative implications. The ratings on Greece have not
been placed on CreditWatch. The ratings on the eurozone sovereigns are
listed below.

Today’s CreditWatch placements are prompted by our belief that
systemic stresses in the eurozone have risen in recent weeks to the
extent that they now put downward pressure on the credit standing of the
eurozone as a whole.

We believe that these systemic stresses stem from five interrelated
factors:

(1) Tightening credit conditions across the eurozone;

(2) Markedly higher risk premiums on a growing number of eurozone
sovereigns, including some that are currently rated ‘AAA';

(3) Continuing disagreements among European policy makers on how to
tackle the immediate market confidence crisis and, longer term, how to
ensure greater economic, financial, and fiscal convergence among
eurozone members;

(4) High levels of government and household indebtedness across a
large area of the eurozone; and

(5) The rising risk of economic recession in the eurozone as a
whole in 2012. Currently, we expect output to decline next year in
countries such as Spain, Portugal and Greece, but we now assign a 40%
probability of a fall in output for the eurozone as a whole.

Our CreditWatch review of eurozone sovereign ratings will focus on
three of the five key factors that form the core of our sovereign
ratings methodology: the “political,” “external,” and “monetary” scores
we assign to the governments in the eurozone (see “Sovereign Government
Rating Methodology And Assumptions”, published June 30, 2011). Our
analysis of “political dynamics” will focus on both country-specific and
eurozone-wide issues that appear to us to be limiting the effectiveness
of efforts to resolve the market confidence crisis. Our analysis of
“external liquidity” will focus on the borrowing requirements of both
eurozone governments and banks. Our analysis of “monetary flexibility”
will focus on ECB policy settings to address the economic and financial
stresses the countries in the eurozone are increasingly facing.

We expect to conclude our review of eurozone sovereign ratings as
soon as possible following the EU summit scheduled for Dec. 8 and 9,
2011. Depending on the score changes, if any, that our rating committees
agree are appropriate for each sovereign, we believe that ratings could
be lowered by up to one notch for Austria, Belgium, Finland, Germany,
Netherlands, and Luxembourg, and by up to two notches for the other
governments.

Our ratings on Greece (Hellenic Republic; CC/Negative/C) are not
affected by today’s actions, as a ‘CC’ rating under our rating
definitions connotes our belief that there is a relatively high
near-term probability of default.

We are publishing separate media releases with the rationale for
each rating action on the 16 CreditWatch actions. We are also publishing
the following article: “Credit FAQ: Factors Behind Our Placement of
Eurozone Governments on CreditWatch”.

Following today’s CreditWatch listings, Standard & Poor’s will
issue separate media releases concerning affected ratings on the funds,
government-related entities, financial institutions, insurance
companies, public finance, and structured finance sectors in due course.

** Market News International Washington Bureau: 202-371-2121 **

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