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Originally published Friday, December 17, 2010 at 8:26 AM

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Ratings agencies put pressure on eurozone

A spate of rating's agency statements this week have intensified concern about Europe's abilities to contain its simmering government debt crisis. Here are a few facts:

The Associated Press

BRUSSELS —

A spate of rating's agency statements this week have intensified concern about Europe's abilities to contain its simmering government debt crisis. Here are a few facts:

WHO: Ireland's debt was downgraded this week, and Greece, Spain, and Belgium received warnings that their debts might also see their ratings fall soon.

MORE PRESSURE: A lower rating means the agencies' analyst see a higher risk a country will not repay its debts. That adds to pressure on bond markets and potentially raises borrowing costs for financially weaker countries.

It's also bad for banks, which hold government bonds as capital buffers for bad times. If ratings fall too far, those bonds might no longer count as risk-free capital, hitting the stability of the banks.

RATINGS GAME: Ratings are expressed as letters and symbols, with triple-A - Aaa at Moody's and AAA at Standard & Poor's - the best. That's reserved for financially strong countries where bond holders have little to fear. At Moody's, anything at or below Ba1 is seen as "junk," or a high-risk investment.

WHO'S WHERE: Germany, with a strong export economy, is triple-A despite carrying significant amounts of debt - and can borrow for 10 years at just above 3 percent.

Greece, whose previous government lied about its finances and which remains deep in recession, is Ba1 with Moody's; Ba1 puts Greece in junk-bond territory. The country relies on a financial lifeline from eurozone governments and the International Monetary Fund but hopes to return to borrowing eventually.

Ireland, which has also been bailed out, saw its Moody's rating fall to Baa1 Friday, just above junk. Spain's debt is Aa1, but Moody's warned that it might face a downgrade soon.

WHOSE CALL: Moody's and Standard & Poor's are the biggest rating agencies, followed by Fitch. All three are based in the United States.

HOW ACCURATE: The big three have been criticized for not recognizing the risk of the bundled mortgage investments central to the global financial crisis. The EU is currently reviewing the role these agencies played in the continent's woes and is considering supporting local rivals.

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