Updated from 2:06 p.m. EST with response from the chief of the European Financial Stability Facility to Standard & Poor's downgrade of the facility to double-A-plus.
) -- Ratings agency Standard & Poor's Monday downgraded the long-term credit rating of the eurozone's bailout fund, the European Financial Stability Facility, to double-A-plus from triple-A.
The move follows
of multiple eurozone nations, including the region's No. 2 economy, France.
"The downgrade to 'AA+' by only one credit agency will not reduce (the) EFSF's lending capacity of euro440 billion," Klaus Regling, the fund's chief executive officer, said in a statement, according to the
The other two major ratings agencies, Fitch and Moody's, still rate the EFSF triple-A. That means it remains a top-tier investment for most investment funds. If the other agencies follow S&P's lead, however, the bailout fund will face higher borrowing costs or it will have to increase guarantees from its triple-A-rated members, the
a news release
, S&P said it lowered the rating on the EFSF because two of its guarantor states -- France and Austria -- were downgraded to double-A-plus on Friday.
"We consider that credit enhancements that would offset what we view as the now-reduced creditworthiness of the EFSF's guarantors and securities backing the EFSF's issues are currently not in place," the ratings agency said.
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S&P said it had removed the EFSF's ratings from CreditWatch, where they had been placed with negative implications on Dec. 6.
S&P affirmed the short-term issuer credit rating at A-1+.
This article was written by a staff member of TheStreet.