Small rating agency downgrades Germany

AP News
Posted: Jun 26, 2012 3:42 PM
Small rating agency downgrades Germany

BERLIN (AP) — Egan-Jones credit ratings agency says it has downgraded Germany by one notch from AA- to A+ and has issued a negative watch for the country's sovereign debt amid Europe's lingering debt crisis.

The U.S. company cited Germany's implicit debt stemming from different mechanisms stabilizing the 17-nation eurozone as the main reason for its decision.

The world's top three rating agencies — Moody's, Standard & Poor's and Fitch — give Germany their best rating and have not questioned the AAA for Europe's biggest economy.

Most investors consider Germany's sovereign debt to be a safe haven, significantly driving down the yields and making it cheap for Germany to borrow new funds. Recently a short-term debt auction even brought negative yields, meaning investors paid Germany to take their money.