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S&P revises EU outlook to 'negative' from 'stable'; rating at AA+

A woman walks past an Alpha Bank ATM and a shopping window announcing sales in central Athens, July 21, 2015.
Yiannis Kourtoglou | Reuters

Standard & Poor's Ratings Services revised on Monday its outlook for the European Union to "negative" from "stable." The AA+/A-1+' long- and short-term issuer credit ratings were affirmed.

The agency cited an expectation that "the EU will provide first-loss guarantee support for financing connected to the Juncker Plan," among other issues.

The investment plan, announced by European Commission President Jean-Claude Juncker last November, is meant to encourage financing of viable investments in Europe. The plan was backed by the European Parliament in June.

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"The EU's repeated use of its balance sheet to provide higher-risk financing to EU member states (most recently including Greece), without the member states' paying in capital," was mentioned as a factor in a press release.

S&P also cited further downward pressure on the rating of budgetary contributions to the supranational institution due to negative outlooks on the second- and third-most important contributors— the U.K. and France.

The release also read:

"The negative outlook on the EU also reflects its lack of any paid-in capital, a key difference compared with other multilateral institutions. The EU continues to run a very large negative net asset position, largely reflecting its considerable pension obligations."