German bonds garner top rating as Greece wavers

The international ratings agency Standard & Poor's stood by its top rating of Germany's sovereign debt on Wednesday, in sharp contrast to a warning issued two days earlier to Greece.

German bonds garner top rating as Greece wavers
Photo: DPA

S&P affirmed the “AAA” long-term and “A-1+” short-term sovereign credit ratings of Europe’s biggest economy, which serves as a benchmark for other European countries.

“Germany’s track record of prudent economic and budgetary policies continues, with a relatively modest fiscal deficit expected in 2009,” a research note said.

“We expect fiscal consolidation and spending discipline to continue under the new government, following the temporary budgetary weakening in the wake of the recession,” it added in reference to Chancellor Angela Merkel’s new centre-right coalition.

On Tuesday, Dieter Engels of the German audit office warned however that the government would have to repair its budget in light of higher borrowing, and the government’s own economic advisors have said it should take back “gift baskets” of planned tax relief.

On Tuesday meanwhile, S&P warned Greece that its sovereign debt could be downgraded if the government failed to clamp down on its growing deficit. Fitch Ratings subsequently downgraded its assessment of Greek debt, raising the cost of borrowing for officials in Athens.

On Wednesday, UniCredit fixed income strategist Luca Cazzulani told AFP the yield or interest on Greek bonds was 2.44 percent higher than on benchmark German bonds, which he said was “definitely much higher than a week ago.”

European Union officials have issued a chorus of warnings to Greece, and S&P’s rating of Germany hammered home the message that governments must keep their finances in order despite having to stimulate economies during the global economic downturn.

Britain, Ireland and Spain are also seen as possible problem countries though the two former were expected to address debt issues in a pre-budget report and a formal budget to be unveiled on Wednesday.

In Germany meanwhile, “despite passing through a severe global economic contraction this year, the German economy remains resilient, thanks to years of corporate restructuring, wage restraint, and a high savings rate,” S&P said.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.


Emergency numbers fail in several German states

Callers to the emergency numbers 110 and 112 weren’t able to reach operators Thursday morning in several German states.

The 112 emergency number on an ambulance.
The 112 emergency number on an ambulance. Photo: picture alliance/dpa | Boris Roessler

The emergency number 110 for police and 112 for fire crews failed around the country early Thursday morning, with callers unable to reach emergency operators for urgent assistance between about 4:30 am and 5:40 am local time.

The Office for Civil Protection and Disaster Aid is looking into these outages, which were reported in states including Lower Saxony, Baden-Württemberg, and  Brandenburg, and in major cities like Berlin, Cologne, Hamburg, and Frankfurt. Cologne was further affected by cuts to electricity, drinking water, and regular telephone services. Lower Saxony also saw disruptions to the internal phone networks of police and hospitals.

Emergency services are not reporting any more disturbances and people should be able to once again reach 110 and 112 around the country as normal.

Investigators are looking into the problem, but haven’t yet established a cause or any consequences that may have happened due to the outage. Provider Deutsche Telekom says they have ruled out the possibility of an attack by hackers.