• Fitch downgrades the long-Term rating of the guaranteed long-term debt issued by the European Financial Stability Facility (EFSF) to ‘AA’ from ‘AA+’
  • Removes it from Rating Watch Negative (RWN)
  • Short-term rating of the short-term (less than 12 months contractual maturity) guaranteed debt instruments issued by the EFSF have been affirmed at ‘F1+’
  • Fitch has also affirmed the European Stability Mechanism’s (ESM) ‘AAA’ Long-term Issuer Default Rating (IDR) and removed it from RWN
  • The Outlook is Stable
  • The Short-term IDR has been affirmed at ‘F1+’
  • The issue ratings of ESM’s all unsecured bonds have also been affirmed at ‘AAA’ for long-term debt and F1+ for short-term debt

Fitch cites:

  • The downgrade of the EFSF’s debt issues reflects Fitch’s downgrade of France’s IDR to ‘AA’ from ‘AA+’
  • The affirmation of ESM’s IDR reflects the introduction of significant changes to its operational guidelines regarding lending limits

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Impact?

Limited …

For 2 reasons:

  1. This would have been expected given France’s downgrade on Friday, and
  2. The focus is elsewhere for the euro (think Russia, inflation (lack of), “to QE or not to QE”?, FOMC this week, global growth… )

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The EFSF is the eurozone’s bailout fund