WASHINGTON (MNI) – The following is the text of a statement Tuesday
by Standard & Poor’s:

Overview

* On Dec. 5, 2011, Standard & Poor’s placed its ratings on the
‘AAA’ rated sovereigns which guarantee the financial obligations of the
European Financial Stability Facility (EFSF).

* As a result, we are also placing the ‘AAA’ long-term credit
rating on EFSF on CreditWatch negative and affirming the ‘A-1+’
short-term rating.

* Depending on the outcome of our review of the ratings on EFSF
member governments, we could lower the long-term rating on the EFSF by
one or two notches, if any.

* The issuer and issue ratings we will assign to EFSF following our
CreditWatch review will likely be the same as the lowest issuer rating
we assign to the rated EFSF members we currently rate ‘AAA’, unless
there are offsetting credit enhancements in place.

Rating Action

On Dec. 6, 2011, Standard & Poor’s Ratings Services placed the
‘AAA’ long-term credit rating on the European Financial Stability
Facility (EFSF) on CreditWatch with negative implications. At the same
time, we affirmed the ‘A-1+’ short-term credit rating on EFSF.

Rationale

Our ‘AAA’ long- and ‘A-1+’ short-term ratings on EFSF are based on
(i) the unconditional, irrevocable, and timely guarantees from EFSF
members (guarantor members) rated ‘AAA’ by Standard & Poor’s that
support EFSF’s obligations (bonds, notes, commercial paper, debt
securities, or other financing arrangements) and, (ii) the ‘AAA’ rated
securities that constitute EFSF’s liquidity reserves. Standard & Poor’s
has placed the ‘AAA’ long-term issue ratings on EFSF’s guarantor members
Austria, Finland, France, Germany, Luxembourg, and The Netherlands on
CreditWatch negative (see “Standard & Poor’s Puts Ratings On Eurozone
Sovereigns On CreditWatch With Negative Implications,” published on Dec.
5, 2011), indicating our view of their increased credit risks.

A CreditWatch negative placement indicates that, in our opinion,
there is at least a one-in-two probability of the rating being lowered
in the short term. Based on EFSF’s current structure, were we to lower
one or more of the current ‘AAA’ ratings on EFSF’s guarantor members,
all else being equal, we would lower the issuer and issue ratings on
EFSF to the lowest sovereign rating on members currently rated ‘AAA’.

In our media releases of Dec. 5, 2011, on the CreditWatch
placements of individual ‘AAA’ rated guarantor members, we indicated
that our ratings on Austria, Finland, Germany, Luxembourg, and The
Netherlands are currently unlikely to fall by more than one notch, and
the ratings on France by no more than two notches, if at all.
Accordingly, we currently anticipate that if we lower the rating on
EFSF, it could be by up to two notches.

CreditWatch

We expect to resolve EFSF’s CreditWatch placement within 90 days
and, if possible sooner, after we complete the review of EFSF guarantor
members currently rated ‘AAA’.

We could lower the long-term credit rating on EFSF by one or two
notches if we were to lower the ‘AAA’ sovereign ratings, which are
currently on CreditWatch, on one or more of EFSF’s guarantor members.
Conversely, we could affirm the ‘AAA’ ratings on EFSF and its issues if
we affirm the rating on all six of EFSF’s guarantor members currently
rated ‘AAA’. We could also affirm the ratings if we were to lower the
current ‘AAA’ ratings on one or more guarantor members, but had evidence
that the EFSF guarantor members were implementing further credit
enhancements that were in our view sufficient to mitigate the relevant
guarantor members’ reduced creditworthiness.

** Market News International Washington Bureau: 202-371-2121 **

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