A small US ratings agency has downgraded Germany, claiming Berlin’s exposure to the European debt crisis poses a worrying risk. However, the three major assessors of creditworthiness maintain their faith in the country.
New York-based Egan-Jones said that Germany's direct and indirect exposure to the financial problems in other parts of the eurozone would affect the country's finances.
It said deterioration of the financial system across Europe would mean a greater burden being placed upon the eurozone's biggest economy, downgrading Germany from A+ to AA-.
"Our major fear is Germany will be expected to provide indirect financial support to weaker EU banks over the next couple of years to ameliorate asset quality problems and replace fleeing deposits," the agency said.
Michigan-based Egan Jones was critical of Chancellor Angela Merkel, accusing her of stubbornness in negotiations with other EU leaders on dealing with the crisis.
"Merkel continues to create tension with EU member states by resisting calls for EU bonds," the agency said. It placed the country on its negative watch list, opening the possibility for a further downgrade.
The downgrade came ahead of an EU summit starting on Thursday, in which national leaders will debate suggestions for a strong banking union and greater fiscal discipline.
The global top three rating agencies - Moody's, Standard & Poor's and Fitch - still give Germany their best rating, AAA.
Most investors consider Germany's sovereign debt to be safe, significantly driving down yields that determine what the country must pay to obtain credit.
rc/slk (AFP, AP)