BRUSSELS (MNI) – The European Commission on Monday sought to
downplay the importance of Standard and Poors’ decision last Friday to
downgrade the credit ratings of nine Eurozone states.

The rating agency’s decision stemmed from a “serious misperception”
that the EU’s crisis strategy was based on austerity alone, a spokesman
for the Commission said.

Standard and Poors’ has failed to appreciate the significance of
structural reforms taken by Eurozone governments, the spokesman said.

The spokesman also criticized the timing of the downgrades as
“odd,” noting that they came “after several positive developments,”
namely new structural reforms announced in France, Italy and Spain.
There have also been “very positive signals from the market” in recent
bond issues by Spain and Italy, he said.

Downplaying the value of the rating agency’s opinion, the
Commission spokesman said “we have information that rating agencies
don’t.” The Commission has the most up to date picture of “the exact
situation of public finances” in the EU member states, he said.

Brussels has been a harsh critic of rating agencies since the start
of the sovereign debt crisis and last year proposed new rules, now being
debated by EU lawmakers, to weaken the influence of the agencies on
market players’ investment decisions.

On Friday S&P stripped France and Austria of their AAA ratings and
downgraded seven other Eurozone states on because of concerns that “the
policy initiatives that have been taken by European policymakers in
recent weeks may be insufficient to fully address ongoing systemic
stresses in the Eurozone.”

The agency cut ratings of France, Austria, Italy, Spain, Portugal,
Cyprus, Malta, Slovakia and Slovenia.

Turning to the difficult negotiations between Greece and private
bondholders over a restructuring of the country’s debts, the Commission
spokesman said that talks “will resume soon” and that it was “confident
this second part of the talks will be concluded shortly.”

— Brussels newsroom: +32495228374; pkoh@marketnews.com
Peter Koh, Brussels Correspondent, Market News +32(04)95228374
[TOPICS: M$$CR$,MFX$$$,MGX$$$,M$F$$$,MR$$$$]