S&P strips France of AAA rating, lowers ratings for eight other EU nations; Italy down by two notches, Portugal to 'junk'

Standard & Poor’s has stripped France of its AAA credit rating, cut Portugal’s credit to junk status and downgraded Italy’s debt by two notches in a wholesale downgrade of European countries caught up in the European debt crisis.

France has gone from its prized AAA rating to AA+. Austria had an identical fate. (S&P has previously downgraded the US in a similar manner. For comparison, Australia has a AAA rating, 'stable'. New Zealand had its rating cut by S&P in September 2011 from AA+ to AA, with a 'stable' outlook.)

Germany retains its AAA rating. While Finland, the Netherlands and Luxembourg kept their AAA ratings, they were put on negative watch.

S&P also cut the ratings of Italy, Spain and Portugal by two notches.

Italy has gone from A to BBB+.  Spain has gone from AA- to A.  Portugal has fallen below investment grade, going from BBB- to BB.

All changes happened at 9pm Brussels time, after markets had closed in both Europe and the US. Few European governments were happy - all aimed salvos at S&P for these changes.

The full list of changes today are ...

The outlook for all countries is 'negative', except for Germany and Slovakia where the outlook is 'stable'. 

There is speculation now that the new European rescue fund, the European Financial Stability Facility, which is designed to prevent the contagion from spreading to large countries like Italy and Spain, would likely see its borrowing costs rise. It too may be downgraded.