Standard & Poor's Downgrades Belgium Debt to AA

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Belgium's Central Bank Governor Coene addresses a news conference in Brussels
Belgium's Central Bank Governor Luc Coene addresses a news conference on 2011 economic forecasts, in Brussels June 15, 2011.

Standard and Poor's on Friday downgraded Belgium's sovereign debt from AA+ to AA with a negative outlook.

We think the Belgian government's capacity to prevent an increase in general government debt, which we consider to be already at high levels, is being constrained by rapid private sector deleveraging both in Belgium and among many of Belgium's key trading partners, S&P said in a statement.

It also cited Dexia SA's Belgium bank sale as a negative factor.

Moody's had also said in October that it was considering downgrading Belgium's debt, but has yet to do so.

The material increase in long-term funding risks for euro area sovereigns with high levels of public debt, such as Belgium, as a result of the sustained fragility in the wholesale finance environment for euro sovereigns and banks stemming from the sovereign debt crisis, contributed to its decision, Moody's said in a statement at the time.

Belgium's yield on 10-year bonds increased to 5.89 percent before the downgrade.

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