"The longer the sovereign and bank funding markets
remain volatile, the more likely it is that further credit pressures will
develop for most euro area countries, including Aaa-rated (ones)," the
rating agency said.
The statement from Moody's, which had said this month it
would review the ratings of all 27 EU states in the first quarter of next year,
echoed the concerns of its peers.
Standard & Poor's warned on Dec 6. that the sovereign
debt crisis could prompt it to downgrade the ratings of 15 euro zone members,
including Germany, France and Austria.
Separately, two independent European government sources
told Reuters on Friday that Standard & Poor's is expected to release its
eagerly awaited verdict on debt ratings for 15 euro zone countries in January.
"We have got an informal signal from Standard &
Poor's that they will come only in January," said one of the sources who
declined to be named because exchanges with the rating agency are confidential.
On Dec. 16, Fitch put six euro zone economies including
Italy and Spain on watch for potential near-term downgrades, saying it thought
a comprehensive solution to the euro zone's debt crisis was beyond reach.
Policymakers struggling to reach a consensus on tackling
the debt crisis are focused on a plan for tighter euro zone fiscal rules, which
they hope will prevent the problems from worsening.
But the market response to a Dec. 9 EU summit at which
that plan was thrashed out has been cool, due also to the European Central
Bank's reluctance to play a more interventionist role.
Moody's said on Friday that, while Austria's Aaa ratings
were still stable, that outlook increasingly depended on a resolution of the
euro zone crisis "which has begun to negatively affect core euro area
member states like Austria".
The rating agency also highlighted the risk posed by
Austria's relatively large banking sector and its exposure to central and
eastern Europe.
Markets took the Austria news in their stride.
Spreads for 10-year Austrian government debt over
benchmark German Bunds were little changed at around 109 basis points by 1130
GMT.
LOOKING EAST
Moody's said a substantial and prolonged deterioration of
Austria's ability to handle its debt would weigh on the rating.
"A scenario with a series of sovereign defaults and
exits from the euro zone would also put pressure on Austria's rating, as it
would for other euro zone Aaa-rated sovereigns," it said.
In reaffirming Austria's rating, it cited the country's economic
strength, skilled labor force, competitive export sector, low unemployment and
sound finances.
It "views positively the recent announcement by the
government to introduce a balanced budget requirement into the constitution as
well as attempts to limit the sovereign's exposure to the banking system's
foreign operations".
The coalition government has adopted a balanced budget
law that caps the structural budget deficit at 0.35 percent of GDP from 2017
and aims to reduce national debt to 60 percent of GDP by 2020 after peaking at
around 75.5 percent in 2013.
But it has struggled to find an opposition party willing
to give it the two-thirds parliamentary majority it needs to anchor the law in
the constitution, which would make it harder for future governments to
overturn.
Finance Minister Maria Fekter said in a radio interview
it was "absolutely forbidden" to ease up on efforts to improve state
finances despite the positive report from Moody's.
"We need to pursue a long-term strategy of cutting
deficits and debt and improving the quality of Austria as a location, not
scaring and driving off investors," she said.
Austrian banks' exposure to central, eastern and
southeastern Europe stood at around 225 billion euros ($294 billion) by
mid-2011, of which 57 percent was to countries that joined the European Union
in 2004 and where the central bank said this month "political risk has
increased again of late".
In neighboring Hungary, for instance, banks are being
saddled with big losses from the government's decision to let borrowers repay
foreign-currency loans at below-market exchange rates.
Hungarian
Prime Minister Viktor Orban has also rejected a European Commission request to
withdraw two disputed laws, a move which could derail Hungary's talks about a
new deal with lenders and may trigger a market crisis.
