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.
"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."