The eurozone’s temporary bailout fund lost its top rating on Monday with Fitch after the ratings agency also downgraded France’s credit rating from AAA.
Fitch sank the European Financial Stability Facility’s (EFSF’s) rating by one level from AAA to AA+ like it did France’s rating on Friday.
“EFSF’s ratings rely on the irrevocable and unconditional guarantees and over-guarantees provided by euro area member states,” Fitch said in a statement, adding the France’s downgrading “had a high weight” in its announcement on Monday.
It said all of the fund’s issued debt is guaranteed by countries with ratings of AAA or AA+ but if any of those ratings fall below AA+, the fund’s rating would be reviewed.
It added, however, that the outlook for the rescue fund’s rating was stable and no further downgrading was on the horizon.
France, Europe’s second-largest economy, is the fund’s most important guarantor along with Germany, the continent’s largest economy.
The fund has a credit capacity of 400 billion euros ($523 billion), but as of July 1, it no longer funds new rescue programmes.
That responsibility goes instead to the eurozone’s permanent bailout fund, inaugurated in October, the European Stability Mechanism.
In contrast to its predecessor, the permanent fund has been outfitted not only with guarantees but also with cash for a total of 700 billion euros in funding.
Fitch on Monday did not mention the permanent fund, which it has given an AAA rating.