France credit rating cut puts eurozone bail-out fund at risk The five PIIGS countries - Portugal, Italy, Ireland, Greece and Spain - together have €186bn of bonds and bills maturing in the first three months of 2012. The EFSF's remaining AAA countries could only guarantee around €290bn of debt of which €140bn is already earmarked for agreed bail-outs. Just a day after Mario Draghi, the Presi­dent of the European Central Bank, heralded "tentative" signs of economic stab­i­lisation, S&P lowered the long-term ratings on Italy, Spain, Portugal and Cyprus by two notches, raising their debt-refinancing costs. Portugal and Cyprus were cut to junk status, while Austria also lost its AAA rating. While the Netherlands, Finland and Luxembourg retained their AAA ratings, they were among 14 eurozone countries - also including France, Italy and Spain - that S&P put on "negative outlook," implying a one-in-three chance of a downgrade. Only Germany and Slovakia were "stable." S&P said the downgrades were "primarily driven by our assessment that the policy initiatives that have been taken by European policy-makers in recent weeks may be insufficient to fully address ongoing systemic stresses in the eurozone." Francois Baroin, France's finance minister, insisted the cut was not a catastrophe but that it meant the country "must follow and amplify reforms." Olli Rehn, EC vice-president, took a swipe at S&P, saying that after verifying that this time it had not come up with an "accidental" downgrade of France, he regretted the "inconsistent decision." He said S&P had made its move "at a time when the euro area is taking decisive action in all fronts of its crisis response," including recent action by the ECB that had been "instrumental in easing tensions in sovereign bonds markets." The downgrades came after the sudden break up of tortuous debt talks in Athens as private bondholders said they were not convinced of the "benefits of a voluntary approach." Negotiations will resume on Wednesday. No deal could result in Greece becoming the first developed country in 60 years to default on its debts. Greece could also forfeit its €130bn bail-out. But a forced haircut would trigger credit default swaps - which insure the debt - and more chaos. Raoul Ruparel of Open Europe said the Greek debt talks are a bigger threat than ratings cuts. With rumours of the S&P downgrades sweeping the markets yesterday afternoon the yield on French, Italian and Spanish 10-year bonds jumped while Britain benefited again as traders fled to the safe haven of gilts. Stockmarkets fell marginally. The Stoxx 600 and French CAC slid 0.1pc and he Dow Jones 0.4pc. S&P was accused of being "out of order" by Michael Fuchs, deputy leader of Angela Merkel's Christian Democrats. He claimed Britain should also be downgraded. "S&P must stop playing politics ... why doesn't it act on the highly indebted United States or highly indebted Britain?" he demanded.