And (Long Overdue) Scene: Belgium Downgraded By S&P From AA+ To AA, Outlook Negative

The dominos are now falling daily, if not hourly. We give AustriAAA a few days at the most.

Just as we hinted earlier in the week when the Dexia deal started to crumble, it seems a major driver of the downgrade is the country's financial sector risk.

The spread between Blegium and France has legged wider as Dexia has deteriorated - its seems if there is any risk transfer this will change but at this rate, only France will be capable (and even then not really).

And as a comparison, here are the German, French, Belgian, and Italian yield curves.

Chart: Bloomberg