Confusion is definitely taking over at Standard & Poor’s. This weekend, the director of sovereign ratings in Europe declared that Euro-bonds will score CCC, same as Greece’s rating, even if the bonds were also backed by Germany and France.
The agency backpedaled today, indicating that its director had been wrong declaring that a Eurobond would get the rating of the worst rated country…
“S&P would like to clarify these remarks about Eurobonds during the Alpach forum in September 3. They were referring to bonds with a multiple guarantee and not a common one” tried to justify the agency in a statement today.
“According to the criteria published by S & P, bonds with multiple guarantees (in which each issuer guarantees its debt share) are usually rated (some factors put aside) the same as the lowest rated participant. The bonds that have a common guarantee (where each issuer provides the entire debt, not only his part) are subject to different criteria, and often better rated”.
With such weak explanations, S&P’s reputation will undoubtedly continue to deteriorate after having been strongly affected by the episode of the USA’s AAA.
