S&P warns 15 Eurozone states of possible downgrade

Dec 06, 2011 (LBO) - Standard and Poor's has placed 15 Eurozone nations on negative credit watch indicating that they have a 50 percent chance of a downgrade. "In our view, systemic stress in the eurozone has risen in recent weeks and reached such a level that a review of all eurozone sovereign ratings is warranted," S & P said.

"We believe that this systemic stress emanates from five interrelated factors.

"We also believe that these factors influence the creditworthiness, in varying degrees, of all the members of the eurozone."

The rating agency said credit conditions had tightened partly due to new Basle capital rules, risk premiums were rising and there were continued disagreements with European policymakers on how to tackle problems.

State and household indebtedness was high and risk of recession was higher for 2012 with economies of Spain, Portugal and Greece expected to contract and a 40 percent chance and the entire zone will show negative growth.

Many European nations engaged in 'stimulus' to boost growth, after taking on bank debt and other liabilities to the public balance sheet in the belief that more state spending and d