BRUSSELS (Reuters) - Standard & Poor’s decision to place the European Union’s credit rating on watch for possible downgrade does not take into account that the EU budget has a special status, with no deficit or debt, the European Commission said on Thursday.
Standard & Poor’s said on Wednesday it had placed the European Union’s financial operations — not all the 27 countries in the EU — on watch for a possible credit downgrade.
The agency said it may cut the EU’s AAA long-term issuer credit rating if it lowers the current AAA ratings of one or more member states. S&P this week placed 15 euro zone nations on watch for possible downgrade.
“The Commission takes note that Standard & Poor’s has placed the EU “AAA” long-term rating on CreditWatch negative,” Commission spokesman Amadeu Altafaj said in a statement.
“S&P has motivated its decision as a follow up to its decision to place on credit watch negative 15 out of the 17 euro area Member States. This means that it could lower the EU’s long term rating by one notch if the AAA rating of Member States were reduced as a consequence of the agency’s concerns about the deepening financial and sovereign debt crisis,” Altafaj said.
“The Commission’s view is that S&P’s rationale for placing several euro area member states under credit watch with negative implications cannot be extended to the EU itself,” he said.
“Indeed, the EU credit rating should be assessed on its own merits, due to the special status of the EU budget (without deficit or debt) and the EU own resources.”
Reporting By Jan Strupczewski