Fitch downgrades European rescue loan fund

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Associated Press

Posted on July 15, 2013 at 12:34 PM

Updated Monday, Jul 15 at 12:34 PM

LONDON (AP) — Fitch Ratings has cut its credit grade for the European fund that provides rescue loans to Greece, Ireland and Portugal.

The agency says it lowered the rating for the European Financial Stability Facility — or EFSF— by one notch from AAA to AA+ as a result of its downgrade of France last week. The EFSF's creditworthiness depends on that of the countries that provide its financing, which includes France.

Monday's downgrade of the EFSF means the fund could have to pay higher interest rates to raise money. Fitch's rivals Standard & Poor's and Moody's have already downgraded it.

The EFSF has been taken over by a new, permanent bailout fund, the European Stability Mechanism. However, it still manages the rescue loans to Greece, Ireland and Portugal.

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