Moo
dy's Investors Service said Thursday that downgrades to troubled nations in the euro zone were not over, thanks to inadequate measures to resolve the ongoing debt crisis that were announced last week by the European Union (EU).
Reuters reported that Moody's was critical of the steps taken by the EU, although it conceded that those provisions did confirm policymakers' commitment to helping weaker nations survive their liquidity problems. However, the fact that those countries had uncertain solvency profiles was dominant.
Moody's said in a statement, "Given these developments, our sovereign ratings in the euro area will be driven by three assumptions that were confirmed by Friday's announcements: the lack of solvency support, the distinct possibility of debt restructurings and other forms of sovereign default, and our expectation of a continued difficult funding environment."
