S&P Downgrades Eurozone Bailout Fund

Rating agency Standard & Poor's says it has downgraded the creditworthiness of the eurozone's bailout fund by one notch to AA+. The downgrade, which follows ratings cuts for AAA-rated France and Austria, could hurt the European Financial Stability Facility's ability to raise cheap bailout money.

While most euro countries guarantee the bonds issued by the EFSF, its rating depends on the AAA-countries. The remaining four do not make up enough guarantees to secure the fund's 440 billion euro lending capacity. S&P said it could upgrade the EFSF back to AAA if the eurozone offers new credit enhancements. Earlier today, Nicolas Sarkozy shrugged off France's own downgrade, saying, "We have to react to this with calm. At the core, my conviction is that it changes nothing." (More eurozone stories.)