Standard & Poor's Ratings Services today placed its 'AAA' long-term issuer credit rating on the European Union (EU) on CreditWatch with negative implications. At the same time, we affirmed the 'A-1+' short-term issuer credit rating on the EU.
The CreditWatch placement is prompted by similar CreditWatch placements, which we made on 15 eurozone sovereigns on Dec. 5, 2011. The CreditWatch on the EU is an expression of our concerns about the potential impact on the future debt service capacity of eurozone sovereigns, and therefore also the EU, in the context of what we view as deepening political, financial, and monetary problems within the eurozone. Eurozone members account for 62% of the EU's total 2011 budgeted revenues. For 2011, budgeted revenues from Germany and France were 32% of total EU revenues, at 16% and 14%, respectively. In total, 'AAA' rated member states account for just over 49% of the EU's 2011 budgeted revenues, with only the U.K., Denmark, and Sweden retaining a stable outlook (together they contribute 13% of the EU's 2011 budgeted revenues). Given the EU's dependency on such revenues from national budgets, and our recent CreditWatch placements on the 'AAA' ratings on Germany and France, among others, we will concurrently review the 'AAA' long-term rating on the EU with the ratings on the eurozone member states.
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