S&P Downgrades Europe’s Bailout Fund

Standard & Poor’s has slashed its long-term AAA+ credit rating on Europe’s rescue fund following downgrades on nine euro-zone countries on Friday. S&P released a statement saying the latest downgrade was all but inevitable following identical cuts to the sterling credit ratings of France and Austria, two major guarantors of the bailout fund, known as the European Financial Stability Facility. Though the EFSF said the downgrade won’t reduce its $558 billion lending capacity, the European Stability Mechanism will replace it as a rescue fund. Meanwhile, Greece has been warned about a potential default if it doesn’t secure an agreement over bond holdings with private creditors, after talks broke down with the creditors on Friday.