We have been covering the risks of the AAA rating risks far ahead of the curve on these formal credit ratings downgrades by the major credit ratings agencies. After the United States lost its prized AAA rating by S&P, the question was not IF other downgrades would come. The question became Who is next to lose the AAA rating and when?

The Financial Times reported earlier today that S&P has warned the top European AAA-rated nations that they could lose their prized triple-A ratings if the eurozone debt issue is not resolved soon. This “CreditWatch Negative” pertains to Germany, France, the Netherlands, Austria, Finland and Luxembourg. We have our own take and we are briefly revisiting the review we gave in August on each nation.

• UPDATE: The WSJ noted after 3:00 PM EST that the outlook change may actually be sent to all 17 of the eurozone nations. The first report was merely pertaining to the triple-A nations.

France most certainly has to be on this list due to it being more leveraged even if it is above-par strength for euro nations. S&P even recently had to clarify that an erroneous client transmission caused the news that it was downgrading France from AAA. Is it not fair to at least think of some conspiracy theory at work there? Our take was (and remains) that the “error” was the unofficial downgrade. By our take, France was always at more risk than Germany, and that remains the case today. The difference is that Germany is now likely closer to losing its triple-A status. Germany’s threat of losing its AAA rating sure shines the light on the neighboring nations.

There are some triple-A ratings we just cannot agree with. One is Austria, which got caught up in the loan mess all around Eastern Europe. It is sort of under the wing of Germany by our take, and if one of the two nations is more of a triple-A on its own of the two, it is not Austria. Finland is the other country that we do not consider a true triple-A. Nokia (NYSE: NOK) is a huge component of the economy and to say that Nokia is hurting is an understatement. Finland is also dependent on imports for many of its resources.

As far as the Netherlands, it has much of the same exposure as Germany and the other stronger nations. We considered Holland a nation as a safe triple-A, but if Germany is being taken down then the Dutch will be too. Such is life.

The good news is that this still leaves the United Kingdom unscathed — at least for now. It is not a part of the eurozone and not under the same exact problems. Unfortunately, the collateral damage could come down the pipe for the UK as it has much trade and financial ties even if it is not listed as a nation at-risk today. It seems more than just possible that if a formal downgrade of the top European nations were to come that the UK might then get a further review on its outlook.

Sweden and Denmark are not really a part of this call today, but we wonder if these nations can hold their respective triple-A ratings for long if their much larger neighbors are losing their prized triple-A ratings. We have no new data forcing us to change our view on these two, but the belief is easy to consider that the domino theory might come into play here for these nations.

Some nations are not at risk today. As far as other “safe” Triple-A ratings (if there is such a thing), we continue to view Singapore, Australia, Canada, Switzerland and Norway as not being any part of the current malaise in the world of credit ratings agencies. That could change down the road, but we view these nations as being the safest triple-A nations today.

The age of austerity and living within the confounds of financial means is coming upon us. Actually, the first waves of it have already started.

JON C. OGG

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