EFSF’s Firepower May Drop 35% If France Downgraded, Mizuho Says
This article is for subscribers only.
The lending capacity of Europe’s rescue fund may drop by 35 percent if France’s AAA credit rating is downgraded, because the action will hurt the nation’s ability to guarantee debt issued by the fund, according to Mizuho Corporate Bank Ltd.
The European Financial Stability Facility’s effective lending capacity is currently limited to 440 billion euros ($603 billion), backed by guarantees from top-rated France and Germany. European leaders on Oct. 27 agreed to boost the fund’s size to 1 trillion euros.