Moody's cuts German credit outlook

The German economy had proven resilient to the crisis until late yesterday evening, when Moody's cut the country's outlook from "stable" to "negative". Besides Germany, the Netherlands and Luxembourg saw the same downgrade. Finland's Aaa-rating was confirmed, making it the last country in the eurozone with a stable Aaa-rating.

The looming possibility of Greece's exit from the eurozone, which would be extremely costly to the downgraded countries, is seen as the major reason for the marked down outlook. The cost of debt to support a bailout of Spain is also weighing on the outlook.

German 10-year bond yields, which had opened on 1.19%, rose to 1.27% in response to the news.

A low credit rating in conjuction with a decelerating economy could make life difficult for investors in Germany. While the sentiment among investors in German private equity seems largely positive, a rating cut could have serious consequences on financing options and investor sentiment.

For many banks, providing credit has become more difficult since the onset of the crisis; yet, industry experts claim it was still possible to receive financing for high quality deals.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Send to  

• Topics
• DACH
• Financing
• Germany