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Full Text Of S&P Warning On GermAAAny

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Germany's Unsolicited Long-Term 'AAA' Rating Placed On CreditWatch Negative

  • Standard & Poor's is placing its 'AAA' long-term unsolicited sovereign credit rating on the Federal Republic of Germany on CreditWatch with negative implications. At the same time we are affirming Germany's 'A-1+' short-term unsolicited sovereign credit rating.
  • The CreditWatch placement is prompted by our concerns about the potential impact on Germany of what we view as deepening political, financial, and monetary problems within the European Economic and Monetary Union.
  • Our CreditWatch review will focus on the "political" and "monetary" scores we have assigned to Germany in accordance with our criteria.
  • We expect to conclude our review as soon as possible after the European summit on Dec. 9, 2011.

FRANKFURT (Standard & Poor's) Dec. 5, 2011--Standard & Poor's Ratings Services today placed its 'AAA' long-term unsolicited sovereign credit rating on the Federal Republic of Germany on CreditWatch with negative implications. At the same time we affirmed the 'A-1+' short-term unsolicited sovereign credit rating on Germany.

Our transfer and convertibility (T&C) assessment for Germany, as for all European Economic and Monetary Union (eurozone) members, is 'AAA', reflecting Standard & Poor's view that the likelihood of the European Central Bank (ECB) restricting nonsovereign access to foreign currency needed for debt service is extremely low. This reflects the full and open access to foreign currency that holders of euros enjoy and which we expect to remain the case in the future.


The CreditWatch placement is prompted by our concerns about the potential impact on Germany of what we view as deepening political, financial, and monetary problems within the eurozone. To the extent that these eurozone-wide issues permanently constrain the availability of credit to the economy, Germany's economic growth outlook--and therefore the prospects for a sustained reduction of its public debt ratio--could be affected. Further, it is our opinion that the lack of progress the European policymakers have made so far in controlling the spread of the financial crisis may reflect structural weaknesses in the decision-making process within the eurozone and European Union. This, in turn, informs our view about the ability of European policymakers to take the proactive and resolute measures needed in times of financial stress. We are therefore reassessing the eurozone's record of debt-crisis management and its implications for our view on the effectiveness of policymaking in Germany.

Our CreditWatch review will focus on two areas of our criteria. (See "Sovereign Government Rating Methodology and Assumptions," published June 30, 2011.)

  • The political score. In our view, the overall consistency, predictability, and effectiveness of policy coordination among institutions within the eurozone has weakened at a time of severe ongoing fiscal and economic challenges to a degree more than we envisioned. For Germany, we believe this environment could offset the fiscal consolidation and institutional progress it has made in recent years, such as establishing constitutional public-sector deficit limits. Specifically, we will review the policymaking environment in terms of: the predictability of its overall policy framework and its policy responses to current developments (see "Sovereign Government Rating Methodology and Assumptions," paragraph 40; all paragraph references herein are to this publication); and the effectiveness of policymaking in addressing periods of economic distress and correcting economic imbalances (paragraph 41).
  • The monetary score. We will review the ECB's policy settings and their impact on financial market conditions, the real economy, and ultimately Germany's creditworthiness (paragraphs 107, 117, and 118). If we were to conclude that the ECB's policy stance is unlikely to be effective in mitigating the economic and financial shocks that we believe Germany could be experiencing, we could lower this score.


We expect to conclude our review as soon as possible after the European summit on Dec. 9, 2011.

If we change both scores, we could lower the rating by one notch to 'AA+' (paragraph 24). Conversely, if the above concerns were mitigated by what we consider to be appropriate policy action, we could affirm the rating at 'AAA'.


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Mon, 12/05/2011 - 17:51 | 1948418 john39
john39's picture

the german people will bow to the NWO, or else.  /s

Mon, 12/05/2011 - 19:08 | 1948738 TK7936
TK7936's picture

Do i have to say Beeee instead of AAA at the Dentist now ?

Mon, 12/05/2011 - 17:51 | 1948420 fonzanoon
fonzanoon's picture

Is Germany more likely to get downgraded if they go all in and bail out the eurozone or if they fail to do so?

Mon, 12/05/2011 - 17:55 | 1948438 stirners_ghost
stirners_ghost's picture


Mon, 12/05/2011 - 18:13 | 1948497 Johnny B Good
Johnny B Good's picture

This was no 'Yes' or 'No' question.


Mon, 12/05/2011 - 18:46 | 1948641 sqz
sqz's picture

@Johnny B Good

And you completely missed the point of the clever answer!

Mon, 12/05/2011 - 17:59 | 1948454 FinHits
FinHits's picture

"If we were to conclude that the ECB's policy stance is unlikely to be effective in mitigating the economic and financial shocks that we believe Germany could be experiencing, we could lower this score."

So if S&P does not see a full US-style quantitative easing from ECB, they will lower Germany's rating. Brilliant thinking. Not.

Mon, 12/05/2011 - 19:11 | 1948746 TK7936
TK7936's picture

Bailing out is cool, if you bail out the entire Milky Way Rating agencies will invent a new letter above A for you.

They love money printers and hate those who actually back there paper with products.


Mon, 12/05/2011 - 20:11 | 1948898 Hard1
Hard1's picture

Earth has been just downgraded by the Stellar and Planetary Ratings (S&P), a MRSO (Milky way Recognized Statical Organization) to triple Zed minus outlook negative.  Saturn has outlook positive as the new methodoligy consideres that lack of life is better than lack of intelligent life.

Mon, 12/05/2011 - 18:00 | 1948461 SilverIsKing
SilverIsKing's picture

Germany gets an AAA but only when they grade Europe on a curve.

Mon, 12/05/2011 - 18:12 | 1948493 Carlyle Groupie
Carlyle Groupie's picture

Anyway CreditWatch® really does not mean anything significant from what I understand.

Mon, 12/05/2011 - 18:01 | 1948463 kito
kito's picture

these pesky ratings agencies, worse than cock blockers.....................

Mon, 12/05/2011 - 18:11 | 1948491 Piranhanoia
Piranhanoia's picture

Aa, the raters. They present their story told by an idiot,  that has a really bad plot, where the characters are cardboard, the ending is horrible. 

Like a film critic that works for the studio that made the film.

Mon, 12/05/2011 - 18:12 | 1948495 He_Who Carried ...
He_Who Carried The Sun's picture

Yawn!  S and Pee, read my lips:   Y*A*W*N !

Mon, 12/05/2011 - 18:18 | 1948519 Manthong
Manthong's picture

I do seem to recall something about a few bucks worth of German bonds that were not bid upon not too long ago.

Go figure.

Oh well, bottoms up!


Mon, 12/05/2011 - 20:55 | 1949043 He_Who Carried ...
He_Who Carried The Sun's picture

Um, they actually pay 0.somethingridiculous for their one-year... All that makes real sense.

Mon, 12/05/2011 - 18:18 | 1948520 Johnny B Good
Johnny B Good's picture

They should just be honest and say:

"If the probability, that the focus of the peoples attention shifts from the european debt crisis to the UK/US debt crisis, rises we will lower the rating of several european states in an effort to divert the peoples attention back to europe"

Mon, 12/05/2011 - 18:25 | 1948553 Stoploss
Stoploss's picture

Can the eurotards come up with 5 Trillion by Friday?

Mon, 12/05/2011 - 18:32 | 1948579 1fortheroad
1fortheroad's picture

Thats one big hockey stick!!

Mon, 12/05/2011 - 22:09 | 1949328 jmc8888
jmc8888's picture

S&P, douchebags to the end. 

The funny thing is, they colluded on the way up, now they wish to force gov't into asinine decisions on the way down.  All for your friendly neigborhood bankster.

Hey Standard and Whores, here's something the gov't's can do....Glass-Steagall.


May not be what YOU and your banksters friends, but it IS the only solution (and only part of it).


But hey, you want to prod them into doing something, might as well know it's the opposite of what you really want.



Tue, 12/06/2011 - 01:05 | 1949845 wandstrasse
wandstrasse's picture

I wish I never discovered ZH and the like. The world turns out to be a Kafkaesque nightmare when you read every day about the consequences of that fraudulent debt fiat catastrophe installed by an ignorant, totally detached elite. I could have spent some more years oblivious but less desperate. I enjoyed a little wealth... I enjoy it no longer.. now I see it came out of the printing press - and will slowly disappear there, too, no matter how hard I worked for it. If TPTB do not like that I own a few PMs, they will take it away from me. A few pages of legislation, farewell PMs.

Tue, 12/06/2011 - 03:06 | 1950060 Grand Supercycle
Grand Supercycle's picture

SP500 monthly chart remains bearish and USDX weekly remains bullish, so it’s only a matter of time until the market makes its move.

Sun, 12/18/2011 - 20:54 | 1992505 yxj55
yxj55's picture


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