Moody's reviews Belgian regions for downgrade

BRUSSELS (AP) ? Belgium's financial troubles appeared to mount Monday as Moody's Investors Service announced it was putting the country's three regions on review for a possible downgrade, along with three of their government-related issuers.

The news followed Friday's announcement that Moody's was putting the country's Aa1 ratings on review for possible downgrade, in part because the country was about to pay a significant sum to prop up the French-Belgian Dexia bank.

Over the weekend, Belgium agreed to buy the bank's Belgian subsidiary for $4 billion ($5.4 billion) as part of a restructuring of the lender amid a liquidity squeeze.

Moody's said late Monday it was placing the regions and the government-related issuers on review in part because of their possible exposure to losses stemming from the Dexia restructuring.

The country's three region's are the Dutch-speaking Flemish region, the French-speaking Walloon region, and the bilingual Brussels-capital region.

Beyond the crisis over Dexia bank, Belgium also worries investors because for more than a year its feuding regions have been unable to agree on a governing coalition able to make long-term financial decisions.

Belgium has been ruled in the meantime by a caretaker government. However, in the past few weeks, negotiators have appeared to be edging closer to forming a long-term governing coalition.

Moody's said the review for possible downgrade of the government issuers ? Aquafin NV, Societe Publique de Gestion de l'Eau and Fiwapac ? reflected their strong links with their sponsoring governments, namely, the regions of Flanders and Wallonia.

Moody's defines a government-related issuer as "an entity with full or partial government ownership or control, a special charter, or a public policy mandate from the national or local government."

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Don Melvin can be reached at http://twitter.com/Don_Melvin.

Associated Press

Source: http://hosted2.ap.org/APDEFAULT/f70471f764144b2fab526d39972d37b3/Article_2011-10-10-EU-Belgium-Financial-Crisis/id-b30030a2bf184aea86d83e2b5b22e902

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