Moody’s lowered ratings on Italy, Malta, Portugal, Slovakia, Slovenia and Spain, and also placed the six nations on negative outlook with top ranked Austria, France and the UK, which means the agency could downgrade one or all of the countries’ debt during the next 12 to 18 months. Moody’s cited “uncertainty over the euro area's prospects for institutional reform of its fiscal and economic framework and the resources that will be made available to deal with the crisis,” and Europe’s “increasingly weak” economic climate in its press statement. It said “these factors will continue to have [an impact] on market confidence.”

However, the agency maintained AAA ratings on Luxembourg, as well as Denmark, Finland, Germany, the Netherlands and Sweden.

Shortly afterwards Moody’s said it was maintaining top scores on debt issued by the European Financial Stability Facility, the Luxembourg-based euro zone rescue fund which is backed by euro zone member states. The agency said it affirmed its ratings on the EFSF despite placing the bailout fund’s primary guarantors on negative outlook. “Moody's decision to affirm the EFSF's AAA rating is driven by the fact that no AAA-rated country has lost its top-notch rating,” the agency said.

Nevertheless, it is possible that in the coming days Moody’s will issue further downgrades on significant numbers of European banks and insurance companies--typically large holders of sovereign debt--as well as state-backed infrastructure firms who depend on government guarantees for their own financing.

In January competitive ratings agency S&P lowered the credit scores of nine euro area states--not including the Grand Duchy--and the EFSF, also saying it was not impressed by the recent fiscal actions of European leaders.