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Moody's cuts EU outlook rating

Moody's cuts the European Union's outlook rating, giving the EU a stern warning.

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Moody's is reviewing the ratings of 114 European banks. (AFP/Getty Images)

Moody's has cut the European Union's rating AAA bond-rating outlook from stable to negative today.

According to Bloomberg Businessweek, the change reflects the risks faced by member states Germany, France, the UK and the Netherlands, which comprise about 45 percent of the EU's budget revenue.

Earlier this year, Moody's lowered its outlook for those countries' credit ratings, the BBC reported.

“The creditworthiness of these member states is highly correlated, as they are all exposed, albeit to varying degrees, to the euro-area debt crisis,” Moody's said, Businessweek reported.

According to the Wall Street Journal, Moody's decision comes only days before the European Central Bank meets to agree on measures to buy bonds from weak euro zone countries in order to keep borrowing costs down.  

Mario Draghi, the president of the ECB, said on Monday that the bank intends to buy government bonds "with maturities as much as three years away to bring down borrowing costs for nations in financial distress," Businessweek reported.

http://www.globalpost.com/dispatch/news/regions/europe/120904/moodys-cuts-eu-outlook-rating