Moody’s put the European Union on notice Monday that its top-notch Aaa rating is at risk of downgrade, cutting the outlook on the EU’s creditworthiness to “negative” from “stable” because of the continent’s ongoing debt crisis.
The move follows a similar action in July, when Moody’s revised to negative the outlooks on Aaa-rated Germany and the Netherlands. The outlooks of France and the U.K. had previously been revised to negative.
“The creditworthiness of these member states is highly correlated, as they are all exposed, albeit to varying degrees, to the euro area debt crisis,” Moody’s stated.
Moody’s said it lowered the EU’s outlook because it believed that the countries likely would not “prioritize the commitment to backstop the EU debt obligations over servicing their own debt obligations.”