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.