Rating agency Moody's has stripped the eurozone's new €500 billion ($615 billion) bailout fund of its top credit rating.
Moody's announced Friday to downgrade the European Stability Mechanism's long-term debt rating from AAA to Aa1, maintaining a negative outlook.
The agency said its decision was driven by its earlier downgrade of France. The eurozone's second-largest economy guarantees a sizable part of the ESM's loan capacity.
ESM chief Klaus Regling called the decision "difficult to understand," saying it does "not sufficiently acknowledge ESM's exceptionally strong institutional framework, political commitment and capital structure."
The ESM — one of the 17-nation eurozone's key tools in fighting off its debt crisis — continues to be assigned a top-notch long-term rating by Fitch. Moody's and Fitch also see the fund's short-term credit rating as AAA.