Moody’s Ratings has affirmed the European Union’s top-tier ‘Aaa’ credit rating with a stable outlook, citing robust financial and political support from high-credit member states, as announced late on Friday in London.
In its analysis accompanying the decision, the international ratings agency highlighted that the EU’s ‘Aaa’ rating maintains resilience even against potential downgrades of large, high-rated member states, provided such downgrades are isolated to a single major member state.
Consequently, the EU’s ‘Aaa’ rating and stable outlook remain unchanged, despite Moody’s recent decision to adjust France’s ‘Aa2’ sovereign rating outlook—the eurozone’s second-largest economy—from stable to negative, reflecting an increased likelihood of a downgrade. Moody’s specified that the EU’s rating would likely endure even if France were downgraded to ‘Aa3’.
Last week, Moody’s revised France’s ‘Aa2’ outlook to negative, attributing the shift to rising risks that the French government may not enact measures required to counteract persistently high fiscal deficits and deterioration in debt sustainability.
The Moody’s report emphasized that the EU benefits from a strong legal and institutional framework supporting its financial operations and governance, which is expected to remain intact. The stable outlook reflects expectations that the EU will continue to access substantial financing at competitive interest rates while managing heightened risks stemming from increased financial exposure related to Ukraine and other potential financial stressors.
Earlier this year, Fitch Ratings also reaffirmed the EU’s top rating, marked as ‘AAA’ in its methodology, with a stable outlook. Fitch justified its decision based on the member states’ firm commitment to financial backing of the EU.
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