|EUR / USD||1.37976||0.67|
|EUR / GBP||0.82571||0.59|
|USD / GBP||0.598544||-0.10|
The EU's bailout fund said on Tuesday it was postponing an auction of three-year bonds following rating agency Moody's decision to downgrade France by one notch from its top rating.
"The rating action by Moody's, reducing France's long-term debt rating from "Aaa" to "Aa1", means that EFSF's new long term issuance (currently rated Aaa by Moody's)" no longer satisfies the necessary criteria for selling debt, the agency said in a statement.
"EFSF is currently unable to proceed until this technical aspect is resolved," said Christophe Frankel, the fund's chief financial officer.
Long-term bond issues of the EFSF, the bailout fund set up to assist struggling eurozone countries such as Greece or Ireland, have to be fully backed by countries that enjoy a similar rating to its own top rating.
France has dropped out of that exclusive club -- which now includes only Finland, the Netherlands, Germany and Luxembourg -- so the fund does not have sufficient guarantees to issue long-term debt.
"EFSF will look to bring its new three-year ... offering once the issuer is able to satisfy" these conditions, Frankel added.
The downgrade does not affect short-term debt issuance.
In fact, the EFSF successfully placed nearly two billion euros of six-month debt earlier Tuesday with a negative yield, meaning that investors are effectively paying to park money with the fund.
"This demonstrates that EFSF continues to benefit from strong market support following the French sovereign downgrade," Frankel said.
Late on Monday, Moody's downgraded French debt by one notch from the coveted "Aaa" notation, saying that the country faced big challenges from weak growth and competitiveness.
Moody's said on Tuesday that it was studying the impact of its action on the "Aaa" ratings of the EFSF.
© 2012 AFP
Meet the most eligible internationals in Germany at Expatica Date!
Expatica is looking for readers who want to contribute regularly to our websites.
What you need to know about German schools and daycare.
Want to move to Germany but haven’t figured out the details? Check out Expatica’s overview of the German permit system.
In part one of our two part series, we cover the driving culture in Berlin, where to park and buy gas and, most importantly, the laws.
Our comprehensive guide includes information on how to find work, recruitment agencies, employment contracts and labour law.