Moody’s has lowered its outlook for triple A-rated Germany, the Netherlands and Luxembourg to negative from stable, in a move that highlights the dangers the core of the currency union faces from the eurozone debt crisis, The Financial Times reported.

The rating agency said the outlook had changed because of both the increased likelihood of an exit by Greece from the single currency and the need for greater financial support for struggling eurozone countries from the strongest members of the bloc.

“Moody’s now has negative outlooks on those Aaa-rated euro area sovereigns whose balance sheets are expected to bear the main financial burden of support,” it said.

Finland’s triple A-rating was affirmed with a stable outlook given the country’s “unique credit profile”, leaving it as the sole exception among euro area sovereigns.

Germany’s financial strength has been key to efforts to stem the crisis by organising EU-backed rescue funds for troubled economies.

Moody’s judgments are likely to deepen anger in Germany and elsewhere at the decisions taken by rating agencies, which have faced calls for stricter regulation. But it may also strike a chord among the German public, which is worried about the mounting potential cost of efforts to shore up the eurozone.

Germany’s finance ministry said in a statement: “The eurozone risks that Moody’s mentions are not new ... The very sound state of Germany’s own economy and public finances remains unchanged.”

France and Austria, which are also triple A-rated and were given negative outlooks in February, will be assessed by the end of September in light of the new risks to the eurozone, Moody’s said.
A shift to a negative outlook entails a higher risk of an actual cut in the rating within the next two years.

Standard & Poor’s put 15 eurozone countries on negative credit watch last December.

Moody’s also warned that German banks remained vulnerable to the crisis because of large exposure to Spain and Italy, although the German government said banks’ capital had improved “markedly”.

The move comes as Spain and Italy’s bond yields suffer new highs and Greece faces scrutiny over its austerity measures from policy makers this week.

“The continued deterioration in Spain and Italy’s macroeconomic and funding environment has increased the risk that they will require some kind of external support,” said Moody’s. An exit by Greece “would pose a material threat to the euro” and that even in the event of a strong policy response from the eurozone, it would “set off a chain of financial-sector shocks”, it added.