European Stability fund joins sovereigns on negative watch

Standard and Poors has placed the European Financial Stability fund on negative watch, along with 15 of the countries which guarantee it.

Last night 15 of the fund's guarantors had their own credit ratings placed on negative watch including the two biggest, Germany and France. S&P states that if the agency does lower one or more of the current AAA rated guarantors, it will lower the rating of the fund in line with whichever current AAA sovereign which moves the lowest.

France is on a negative watch for a possible two-notch downgrade, which means the fund too could potentially fall to a AA rating.